Market Overview

Goldman Takes A Bite Of Darden, Spits Out Bloomin' Brands, Wingstop

Goldman Takes A Bite Of Darden, Spits Out Bloomin' Brands, Wingstop

Goldman Sachs has a good feeling about the dining sector.

“We are optimistic on restaurants’ top-line trajectory through 2H18, and see no historical precedent for a rapid reversal from new all-time highs of discretionary wallet share,” the firm said in a Tuesday note.

Goldman does have more faith in some restaurants than others.

The Ratings

Goldman Sachs analyst Karen Holthouse

  • upgraded Darden Restaurants, Inc. (NYSE: DRI) from Neutral to Buy and raised the price target from $106 to $130;
  • upgraded Bloomin’ Brands Inc (NASDAQ: BLMN) from Sell to Neutral and maintained an $18 target; and
  • downgraded Wingstop Inc (NASDAQ: WING) from Buy to Neutral but raised their target from $58 to $66.

The Thesis

Goldman sees risks in labor and delivery costs, quarter-over-quarter “choppiness” and investor awareness that fast food faces a high first-quarter comparable, Holthouse said in a Tuesday note. (See her track record here.)

At the same time, near-peak valuations relative to other discretionary sectors suggest market optimism may already be baked in.

The latter factor merits a sell of Wingstop shares, the analyst said. Goldman Sachs, although generally bullish on comp and unit growth fundamentals, considers the metrics already well-reflected in Wingstop shares.

Bloomin’ Brands’ relatively low valuation appears to account for the analyst's sub-consensus outlook.

“Our survey data suggest some reasons for comp optimism,” Holthouse said in the upgrade note.

Darden appears most palatable, with upside potential for Olive Garden and LongHorn Steakhouse comps, she said. 

“We believe off-premise can continue to act as a 1-percent-plus comp tailwind in F19 and note positive recent data points in search trends."

Price Action

Darden shares were up 0.59 percent at $119.38 at the close Tuesday, while Bloomin’ Brands was down 2.2 percent at $18.71 and and Wingstop was down 1.91 percent at $66.19.

Related Links:

Applebee's Parent Dine Brands Downgraded By Raymond James After 30% Rally

Texas Roadhouse's Valuation, In-Line Growth Prospects Prompt Wedbush Downgrade

Latest Ratings for BLMN

Oct 2020Morgan StanleyMaintainsEqual-Weight
Oct 2020Raymond JamesMaintainsStrong Buy
Sep 2020Raymond JamesMaintainsStrong Buy

View More Analyst Ratings for BLMN
View the Latest Analyst Ratings


Related Articles (DRI + BLMN)

View Comments and Join the Discussion!

Posted-In: Goldman SachsAnalyst Color Upgrades Downgrades Price Target Restaurants Analyst Ratings General Best of Benzinga

Latest Ratings

INTCJP MorganMaintains70.0
STMCanaccord GenuityMaintains47.0
ELDeutsche BankMaintains248.0
UAADeutsche BankMaintains13.0
INTCDeutsche BankMaintains55.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at