Analyst: Darden Restaurants Inc. Could Boost FY15 Outlook

Darden Restaurants Inc.

could be poised to boost its earnings outlook based on a sales rebound and lower costs, an analyst said Monday. The operator of Olive Garden and Longhorn restaurants' recent emphasis on sales promotion has seen notable success, while its customers' lower spending on gasoline could add more fuel to grow sales, Miller Tabak's Stephen Anderson said in a note. http://myfox8.com/2014/11/03/burlington-man-eating-olive-garden-every-day-twice-a-day-for-seven-weeks/ Anderson predicted that when Darden posts quarterly results Dec. 16, it will raise its earnings outlook for fiscal 2015. Darden traded recently at $55.71 a share, down 0.3 percent. In September, Darden forecast same-store sales growth for Olive Garden of 0 percent to 1 percent; growth at LongHorn of 1 percent to 2 percent and 2 percent for its specialty restaurant group which includes five much smaller brands like Capital Grille and Eddie V's. A potential spin-off of Darden's specialty restaurant group "should figure prominently" in an evaluation of its shares, Anderson said. But stronger near-term results for same-store sales should also get consideration from investors, Anderson said. In addition to sales promotions like Darden's bottomless pasta bowl, Anderson cited dropping gasoline prices and its "barbell" menu plan, which highlights higher-priced entrees in the $16.99 to $17.99 range. "As consumer confidence continues to improve, we think higher-ticket promotions will help boost same-store sales growth," Anderson said. The hedge fund Starboard Value LP won a proxy battle last month for control of Darden's board and last week eliminated its poison pill plan while instituting a 10 percent voting threshold to call a special meeting of shareholders. Miller on Monday raised his price target about 3 percent to $61 and maintained a Buy rating.