UPDATE: J.P. Morgan Reiterates Neutral Rating, Lowers PT on Darden Restaurants Following Analyst Conference
In a report published Wednesday, J.P. Morgan reiterated its Neutral rating on Darden Restaurants (NYSE: DRI), but lowered its price target from $50.00 to $45.00.
J.P. Morgan noted, “Darden is growing an industry high 100 new full service units in F13 (ex-Yard House), for 5% unit growth and up from 89 net new units in F12 (ex-Eddie V's). Additionally, the F14 FCF yield of ~1.5%, less than its current 4%+ dividend matched with current net debt/F14 EBITDA of a relatively high 1.7x suggests recent dividend increases must take a pause. All of this adds risk, but the real question is how the new value focused menus being launched at Red Lobster in October 2012 and Olive Garden by February 2013 will be received as additional traffic may be offset by check dilution.”
Darden Restaurants closed on Tuesday at $45.79.
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Tags: J.P. Morgan