UBS Maintains a 'Buy' on Darden Restaurants (DRI); Olive Garden�s Potential Steps to Recovery
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Price: $217.95 -1.78%
Rating Summary:
27 Buy, 18 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
Rating Summary:
27 Buy, 18 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
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UBS maintains a 'Buy' on Darden Restaurants (NYSE: DRI) price target lowered from $51 to $48.
UBS analyst says, "Following the company’s preliminary F2Q EPS of $0.41 (-24% YOY; UBSe $0.54, cons. $0.54), we are lowering our FY12 EPS to $3.60 (+5% YOY; new company guidance $3.55-$3.65) from $3.80. Blended SSS growth of 1.8% was above our 1.3% estimate. However, Olive Garden (OG) SSS declined 2.5% (UBS -1.0%) and consumers shifted demand to lower margin menu items."
"Can Costs and Olive Garden Drive Improvement? New guidance implies 13%-18% EPS growth in F2H (vs. a 11% decline in F1H). This forecasted improvement might keep investors wary and the stock in the “penalty box”--particularly since OG sales, food costs and mix effects (consumer choosing lower margin items) have led to disappointing earnings in recent quarters. We see stock downside risk towards $40 (equal to ~11x FY12E EPS and 4% div. yield), with the Analyst Day in Feb. potentially proving to be a positive stock catalyst."
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 $41.82 yesterday.
UBS analyst says, "Following the company’s preliminary F2Q EPS of $0.41 (-24% YOY; UBSe $0.54, cons. $0.54), we are lowering our FY12 EPS to $3.60 (+5% YOY; new company guidance $3.55-$3.65) from $3.80. Blended SSS growth of 1.8% was above our 1.3% estimate. However, Olive Garden (OG) SSS declined 2.5% (UBS -1.0%) and consumers shifted demand to lower margin menu items."
"Can Costs and Olive Garden Drive Improvement? New guidance implies 13%-18% EPS growth in F2H (vs. a 11% decline in F1H). This forecasted improvement might keep investors wary and the stock in the “penalty box”--particularly since OG sales, food costs and mix effects (consumer choosing lower margin items) have led to disappointing earnings in recent quarters. We see stock downside risk towards $40 (equal to ~11x FY12E EPS and 4% div. yield), with the Analyst Day in Feb. potentially proving to be a positive stock catalyst."
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 $41.82 yesterday.
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