UPDATE: Morgan Stanley Upgrades Brinker International to Overweight on Visibility, Execution and Cash Flow
Morgan Stanley upgraded Brinker International, Inc. (NYSE: EAT) from Equal-weight to Overweight and announced a $38.00 price target.
Morgan Stanley commented, "The case for EAT now: 1) top line drivers, including new food ‘platforms' (e.g. pizza, etc), remodels and recent menu revamps. Our proprietary work suggests that recent menu work has improved value and variety scores to well above industry averages, 2) margin story just at halfway mark to 400 bp, but could exceed if volumes continue to grow, 3) cash flow improves through 15 due to declining capex budgets; all FCF goes back to shareholders in buybacks and divs. Underappreciated ability to use B/S to augment buybacks; we est. an additional ~>$300 M in capacity, enough to buy back ~10% of shares."
Brinker International closed at $33.06 on Tuesday.
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Tags: Morgan Stanley