Morgan Keegan Rates CEC Entertainment (CEC) Outperform

Morgan Keegan analysts Robert M. Derrington, Destin M. Tompkins and Joe C. Drake reiterated their Outperform rating for shares of CEC Entertainment, Inc. CEC. Morgan Keegan does not provide price targets for the companies that it follows. The analysts said they believe that same store sales at CEC Entertainment, Inc. run Chuck E. Cheese's family entertainment restaurants will improve dramatically due to menu pricing, increased benefit from capital initiatives, and an advertising campaign for Chuck E. Cheese's improved birthday party program. The Morgan Keegan analysts wrote, "on its recent conference call, while management officially held its FY10 SSS guidance at +1-2%, it spoke more openly about targeting SSS at the higher-end of guidance or up 2.0%. That confidence appears fueled by easing SSS comparisons, management's strong capital plan to improve its Chuck E. Cheese's experience, modest 2-3% menu pricing and the upcoming roll-out of its improved Birthday party program (including its new Birthday Star Ticket Blaster). Management modestly raised its FY10 EPS to $2.70-2.80, up from $2.68-2.78. Based on our confidence in management's plan, we recently improved our FY10 SSS projection to +2.2% from +1.8% and our EPS projection to $2.82 from $2.78."