Portillo’s downgraded to Neutral from Outperform at Baird

Baird analyst David Tarantino downgraded Portillo’s (PTLO) to Neutral from Outperform with a price target of $12, down from $15. With the probabilities of an economic slowdown seemingly rising following the “shock” of last week’s tariff announcement, Baird lowered estimates and price targets for the restaurants. It still believes exposure to restaurants remains appropriate, but is “dialing up” a preference for franchisors and keeps Outperform ratings on the businesses it thinks would be positioned to perform reasonably well in a downturn scenario. Baird moved to the sidelines on Portillo’s and Starbucks. The firm sees an increasing amount of risk to near-term estimates in both cases when considering that reaching current consensus projections “requires fairly strong improvement” in same-store traffic fundamentals in upcoming periods relative to recent run rates.