Darden (DRI) Energized by Revamped Olive Garden Image, Radical New Red Lobster Menu

After better than expected results in F1Q, analysts at UBS are more confident that Olive Garden and Red Lobster can deliver positive same store sales growth in F13. The growth is likely to be a result of value marketing, menu innovation, and re-imaging, and could help Darden Restaurants (NYSE: DRI) earnings growth reach the high end of guidance.

“We continue to believe that the stock upside rests with Olive Garden’s performance, and it appears as though the brand has responded well to recent value marketing,” said analysts.

“We see Olive Garden’s broader initiatives, which include menu enhancements, a revamped advertising campaign, and reimaging as having a greater long-term impact on the brand’s recovery. In addition, a new emphasis on value and a radical, but fully tested core menu overhaul at Red Lobster should give the chain new life in FY13.”

In response to the revised outlook, UBS reiterated their Buy rating on Darden Restaurants and raised its price target to $62 (from $54).

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 $57.21 yesterday.

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