Bloomin' Brands Faces Downgrade By This Analyst Amid Concerns About Consumer Spending

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  • BMO Capital analyst Andrew Strelzik downgraded Bloomin’ Brands Inc BLMN from Outperform to Market Perform and lowered the price target from $29 to $26.
  • The analyst said BLMN is among several lower multiple casual dining stocks to meaningfully outperform thus far in 2023.
  • Stronger shares coincide with acceleration in January foot traffic for BLMN and peers, though trends likely will normalize in the coming weeks, added the analyst.
  • Foot traffic at Outback Steakhouse accelerated from 13% year-over-year decline in 4Q22 to 8% growth thus far in January, cited the analyst.
  • Also, the analyst added that Carrabba’s strengthened from 12% decline in 4Q22 to 7% growth quarter-to-date.
  • The analyst said the recent strength reflects, in part, favorable weather and cycling the spread of the Omicron variant last year.
  • Among recent data points, a new Technomic survey indicates consumer behaviors are changing even if industry data does not show it yet, noted the analyst.
  • Recent industry conversations highlight that consensus 2023 restaurant margin forecasts likely are too optimistic as a starting point for some casual diners.
  • Consensus currently implies flattish restaurant margins in 2023 (15.2%) relative to 2022 (15.3%), which could be a challenge given BLMN’s prior commentary around the potential for mid- to high-single digit food inflation and lingering labor/other operating cost pressures, said the analyst.
  • The analyst specified that if BLMN had not yet locked beef exposure, the recent inflection in steak prices could create an incremental margin risk in 1H23.
  • Also ReadRaymond James Sees Mixed Q4 Earnings Signals For US Restaurant Stocks
  • Price Action: BLMN shares are trading lower by 0.73% at $23.23 on the last check Wednesday.
  • Photo Via Company
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