DA Davidson Downgrades Darden Restaurants (DRI) to Neutral, Cuts Price Target by 22%
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Price: $221.60 +1.67%
Rating Summary:
27 Buy, 18 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
27 Buy, 18 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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DA Davidson downgraded shares of Darden Restaurants (NYSE: DRI) to a Neutral rating from its previous rating of Buy while slashing its price target from $60 to $47.
The firm's downgrade and new price target follows managements comes following management's new outlook which calls for Q2 earnings of ~$0.41 per share on blended same-store-sales growth of 1.8 percent. The firm was previously forecasts earnings of $0.53 per share on 2.4 percent same-store-sales growth.
Olive Garden seems to be the dead leg as comps look to be down 2.5 percent over the second quarter, well below the 6.8 percent increase at Red Lobster and 6 percent increase at LongHorn Steakhouse.
An analyst at DA Davidson comments on Olive Garden, "The strategy to reestablish the value advantage is proving to be a greater challenge than we appreciated. We continue to believe it will take time to evolve the menu. We agree with the decision to focus on driving traffic, however, it is discouraging that traffic was still down ~1.6% in the quarter with November traffic down ~2.5%; even after adjusting for the calendar shift of Halloween. The weakness in the month of November demonstrates an inability to regain momentum with comps down 5.7%, or ~5.0% after adjusting for the calendar impact. We are lowering our comp expectations for the back half of the year to -2.0% from 1.0%."
To go inline with management's new outlook and current market conditions, DA Davidson cut its Q2, FY12, and FY13 EPS estimates from $0.53, $3.82, and $4.40 to $0.41, $3.53, and $4.10. The firm now forecasts revenue for Q2, FY12, and FY13 will be $1.827 billion, $7.962 billion, and $8.618 billion.
For an analyst ratings summary and ratings history on Darden Restaurants click here. For more ratings news on Darden Restaurants click here.
Shares of Darden Restaurants closed at $47.73 yesterday.
The firm's downgrade and new price target follows managements comes following management's new outlook which calls for Q2 earnings of ~$0.41 per share on blended same-store-sales growth of 1.8 percent. The firm was previously forecasts earnings of $0.53 per share on 2.4 percent same-store-sales growth.
Olive Garden seems to be the dead leg as comps look to be down 2.5 percent over the second quarter, well below the 6.8 percent increase at Red Lobster and 6 percent increase at LongHorn Steakhouse.
An analyst at DA Davidson comments on Olive Garden, "The strategy to reestablish the value advantage is proving to be a greater challenge than we appreciated. We continue to believe it will take time to evolve the menu. We agree with the decision to focus on driving traffic, however, it is discouraging that traffic was still down ~1.6% in the quarter with November traffic down ~2.5%; even after adjusting for the calendar shift of Halloween. The weakness in the month of November demonstrates an inability to regain momentum with comps down 5.7%, or ~5.0% after adjusting for the calendar impact. We are lowering our comp expectations for the back half of the year to -2.0% from 1.0%."
To go inline with management's new outlook and current market conditions, DA Davidson cut its Q2, FY12, and FY13 EPS estimates from $0.53, $3.82, and $4.40 to $0.41, $3.53, and $4.10. The firm now forecasts revenue for Q2, FY12, and FY13 will be $1.827 billion, $7.962 billion, and $8.618 billion.
For an analyst ratings summary and ratings history on Darden Restaurants click here. For more ratings news on Darden Restaurants click here.
Shares of Darden Restaurants closed at $47.73 yesterday.
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