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In a report published Wednesday, Miller Tabak analyst Stephen Anderson downgraded the rating on
Brinker InternationalEAT from Buy to Hold, but raised the price target from $57.00 to $59.00.
In the report, Miller Tabak noted, “We downgrade shares of Brinker International (EAT) to Hold (from Buy) based on valuation as the stock exceeded our prior $57 price target. Same-restaurant sales at Chili's have outperformed casual dining peers in 13 of the past 14 quarters, and based on what we have seen in our recent checks, we estimate same-restaurant sales at EAT's flagship concept accelerated from the +2.6% pace posted in the September quarter (1Q15). We still assert the combination of above-peer same-restaurant sales, tight cost controls, and strong free cash flow position EAT for earnings power expansion in the next several quarters, and think EAT will come close to achieving its FY17 goal of reaching $4.00 EPS by FY16. We thus argue a modest increase in valuation is justified to reflect Chili's outperformance vis-à-vis peers, and raise our fair value estimate to $59 (from $57) to reflect this.”
Brinker International closed on Tuesday at $56.78.
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