Analyst Andrew Strelzik of BMO Capital maintained a Hold rating on Brinker International (EAT – Research Report), with a price target of $150.00.
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Andrew Strelzik’s rating is based on a combination of factors that reflect both positive performance and potential challenges for Brinker International. The company’s recent earnings surpassed expectations, driven by strong performance at Chili’s, which saw impressive comparable sales growth and improved restaurant margins. However, despite these positive results, the magnitude of the earnings beat and guidance revision may not have fully met investor expectations, with the outlook suggesting a potential slowdown in future comparable sales growth.
Strelzik acknowledges the durability of Chili’s turnaround and the company’s ability to maintain or grow margins through operational improvements. Nonetheless, he notes that the shares face near-term headwinds due to tougher comparisons, macroeconomic uncertainties, and potential investments that could limit profitability. Additionally, the company’s history of conservative initial earnings guidance adds to the cautious stance. As a result, while the turnaround is progressing, the current share price may already reflect much of this strength, making a Hold rating appropriate.
In another report released yesterday, Wells Fargo also maintained a Hold rating on the stock with a $150.00 price target.