UPDATE: Bank of America Upgrades Red Robin Gourmet Burgers as Premium Valuation is Warranted

In a report published Monday, Bank of America analyst Joseph T. Buckley upgraded the rating on

from Underperform to Buy, and reiterated the $80.00 price target. In the report, Bank of America noted, “We are upgrading our rating on RRGB shares from Underperform to Buy and are maintaining our $80 price objective. RRGB shares have corrected significantly after a strong 3Q earnings report (with company-operated same store sales up 5.7%) and are trading at a 20%-25% premium to casual dining peers on a P/E basis but at a 5% discount on an EV/EBITDA basis. In our opinion, the latter is the more relevant valuation metric given aggressive depreciation policies at Red Robin. Our price objective reflects an expected P/E of 28x (a 45% premium to the peers) and an EV/EBITDA valuation of 10x or about a 10%-15% premium to the group. We believe that RRGB's performance and prospects warrant a premium valuation.” Red Robin Gourmet Burgers closed on Friday at $66.60.