Jefferies upgrades Texas Roadhouse to Buy, citing overdone pullback; shares rise

Investing.com -- Texas Roadhouse Inc (NASDAQ: TXRH) shares ticked up 2% in Wednesday’s premarket session following an upgrade from Jefferies, which labeled the casual dining chain’s recent pullback a rare buying opportunity. Analyst Andy Barish raised his rating on the stock to Buy from Hold while lifting the price target to $190 from $186, signaling confidence in the company's ability to maintain industry-leading sales and earnings growth.

The move comes after Texas Roadhouse underperformed its casual dining peers, creating what Jefferies views as an "attractive entry point" for a high-quality operator. Despite broader macroeconomic choppiness, the company's solid operational execution and positive foot traffic trends continue to set it apart from quick-service alternatives.

Category demand remains supportive as consumers prioritize experiential dining out occasions that are far more difficult to replicate at home. Jefferies highlighted that Texas Roadhouse is exceptionally well positioned to maintain its share of traffic, citing a track record of quality and consistency that should assuage investor fears around demand volatility.

Beyond steady near-term foot traffic, potential relief in beef input costs could meaningfully expand margins heading into 2027. Healthy cattle inventory levels, the resumption of Mexican cattle imports, and favorable year-over-year comparisons suggest that protein inflation may moderate from recent highs.

Looking ahead, Jefferies expects revenue and EBITDA growth to sit at the high end of the casual dining group in 2027, driven by mid-single-digit unit growth and expanding restaurant-level margins. Emerging concepts like Bubba's 33 are also expected to contribute more meaningfully to top-line expansion over the longer term.

With the stock trading at an EV/EBITDA multiple well below its historical premium relative to peers, Barish noted the recent selloff "appears overdone." Resilient core fundamentals and eventual cost stabilization should support a valuation re-rate back toward historical norms.

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