Wunderlich Downgrades Brinker International On Valuation

Wunderlich downgraded Brinker International, Inc. EAT Tuesday from from Buy to Hold due to valuation but raised its price target from $59 to $65.

Overall, the firm revisited ratings and targets within its coverage universe as many names have come within close proximity of the firm’s price targets.

For Brinker International, Analyst Robert M. Derrington commented that “management has done a masterful job at improving its operating trends, especially at its key Chili's concept.”

Derrington believed “there likely remains upside to our projections,” however “much of that is reflected in EAT's strong price performance of the past 12 months to within 7 percent of our raised PT of $65.”

The analyst note added that "EAT recently traded at an enterprise value of 9.8x our calendar 2015 EBITDA forecast and giving credit to its growing free cash flow yield, we have lifted our PT to $65 from $59 reflecting a 10.0x EV/EBITDA multiple on our calendar 2016 estimates.”

Brinker International closed Friday at $60.84, up 1.5 percent.