Wells Fargo Cuts Valuation Range on Darden Restaurants (DRI) Following New Outlook, Reaffirms Outperform Rating

Wells Fargo is reiterating its Outperform rating on shares of Darden Restaurants (NYSE: DRI) while reducing its price valuation range from$50-$54 to $49-$53.

The company reported disappointing preliminary Q2 results with earnings expectred to be $0.41 per share, well below the consensus of $0.54. As a result of the new outlook, the firm is reducing its Q2 and FY12 EPS estimates from $0.54 and $3.84 to $0.41 and $3.64. Wells Fargo is also lowering its FY13 EPS estimate from $4.36 to $4.26.

An analyst at Wells Fargo comments, "We are encouraged by management's commentary that there is likely to be considerably less year-over-year cost inflation during the remainder of FY2012. We also continue to be encouraged by initiatives underway at Olive Garden. However, we are concerned by the substantial monthly deceleration in comps at Olive Garden. Despite these soft results, we think management is appropriately addressing the brand's value perception and expect earnings growth to re-accelerate in coming quarters."

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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