DA Davidson Cuts Targets on BJ's (BJRI), Cheesecake Factory (CAKE), PF Chang's (PFCB) as Restaurant Sector Beaten Down
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Rating Summary:
28 Buy, 19 Hold, 1 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 11 | Down: 18 | New: 17
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With the Restaurant sector declining recently as the outlook on the economy remains poor, DA Davidson revised estimates and price targets on several stocks in the group Friday morning.
The firm points out the DADCO Restaurant Index fell 7.7 percent in August while the S&P 500 and Russell 2000 decreased by 5.7 percent and 8.8 percent, respectively.
DA Davidson believes investors are currently moving toward franchised brands which offer value and maintain a global presence. This is evident as shares of McDonald's (NYSE: MCD) rose 5 percent in August following strong same-store sales results. Shares of McCormick & Schmick’s Seafood Restaurant (Nasdaq: MSSR) are down 29 percent over the period as investors have moved away from the high-dinning segment amid the slowing economy.
An analyst at DA Davidson commented on McCormick & Schmicks, "Additionally, the market appears to be discounting a lack of value creation to be generated from the formal review process. Although we think it is unlikely the company will be sold this fall, patient investors may be rewarded with a spring 2012 proxy fight. Fertitta is not prohibited from nominating board members and MSSR’s elections are not staggered."
The firm believes, at this time, a continuous pullback in the equity markets, economic uncertainty around consumer behavior, and volatility in restaurant operating results is pressuring restaurant valuations.
DA Davidson is reduced its price targets on the following stocks: BJ’s Restaurants Inc. (Nasdaq: BJRI) from $55 to $52, The Cheesecake Factory Inc. (Nasdaq: CAKE) from $34 to $31, and P.F. Chang's Inc. (Nasdaq: PFCB) from $36 to $34.
The firm points out the DADCO Restaurant Index fell 7.7 percent in August while the S&P 500 and Russell 2000 decreased by 5.7 percent and 8.8 percent, respectively.
DA Davidson believes investors are currently moving toward franchised brands which offer value and maintain a global presence. This is evident as shares of McDonald's (NYSE: MCD) rose 5 percent in August following strong same-store sales results. Shares of McCormick & Schmick’s Seafood Restaurant (Nasdaq: MSSR) are down 29 percent over the period as investors have moved away from the high-dinning segment amid the slowing economy.
An analyst at DA Davidson commented on McCormick & Schmicks, "Additionally, the market appears to be discounting a lack of value creation to be generated from the formal review process. Although we think it is unlikely the company will be sold this fall, patient investors may be rewarded with a spring 2012 proxy fight. Fertitta is not prohibited from nominating board members and MSSR’s elections are not staggered."
The firm believes, at this time, a continuous pullback in the equity markets, economic uncertainty around consumer behavior, and volatility in restaurant operating results is pressuring restaurant valuations.
DA Davidson is reduced its price targets on the following stocks: BJ’s Restaurants Inc. (Nasdaq: BJRI) from $55 to $52, The Cheesecake Factory Inc. (Nasdaq: CAKE) from $34 to $31, and P.F. Chang's Inc. (Nasdaq: PFCB) from $36 to $34.
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