Barclays on U.S. Restaurants: 2Q11 Restaurant Preview...Burgers & Brew

Barclays on U.S. Restaurants: 2Q11 Restaurant Preview...Burgers & Brew

Barclays analyst, Jeffrey A. Bernstein, said, "The sector appreciated 8% in 2Q. Specialty/fast casual and QSR outperformed casual dining, while all outperformed the S&P (up 15%, 13%, 2%, and flat, respectively). We believe casual dining is best positioned as we move through the back half of 2011. Brinker Intl (NYSE: EAT) offers the greatest risk/reward on improving comps and margin drivers, while Darden (NYSE: DRI) and Texas Roadhouse (Nasdaq: TXRH) are relative outperformers due to fundamental strength. In QSR, McDonald's (NYSE: MCD) continues to report industry-leading fundamentals along with the benefit from FX, while Wendy's (NYSE: WEN) offers a greater risk/reward. Our specialty/fast casual concepts (Chipolte (NYSE: CMG), Panera (Nasdaq: PNRA), Starbucks (Nasdaq: SBUX)) continue to report the strongest fundamentals (5-10% comps), though we believe fully reflected in valuation and therefore vulnerable to even a modest deceleration. With that said, of our Equal Weight rated stocks, we believe PF Chang's (Nasdaq: PFCB) and CMG offer the greatest near-term upside, though fundamentals still challenged at the former."

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