UPDATE: BMO Capital Markets Reiterates Market Perform Rating, Lowers PT on Darden Restaurants

In a report published Friday, BMO Capital Markets reiterated its Market Perform rating on Darden Restaurants DRI, but lowered its price target from $63.00 to $52.00. BMO Capital noted, “We see further evidence of an ever-increasing value-conscious (calloused) consumer at all three major brands. Olive Garden reported greater-than-expected traffic declines tied to the 11% price increase in August for Never Ending Pasta Bowl (from $8.95 to $9.95). Red Lobster's Endless Shrimp promo “ran out of steam” during extended weeks in October. And, guest response to LongHorn's ‘stuffed filet' premium-priced promo was soft. Management plans to ‘more aggressively attack affordability' in FY2H13. We expect more price-point-oriented promos with shorter durations and a ‘significantly elevated' number of digital offers to help keep Darden's brands top of mind. Cash flow appears tight, so management must rationalize capital. We forecast ~$1B of Op CF in FY2013, which barely funds the $750M capex plan and ~$260M of dividends. We forecast adjusted debt-to-cap to spike to ~72% and adjusted debt-to-EBITDAR of 3.25x this year, both above limit targets of 65% and 2.5x, respectively. Management indicated that it will ratchet down new unit growth in FY2013 to ~100 units (5% growth) from prior guidance of 100-110 units to preserve capital.” Darden Restaurants closed on Thursday at $45.47.