On Thursday, KeyBanc Capital Markets adjusted its price target for Brinker International (NYSE:EAT), operator of the Chili's and Maggiano's restaurant chains, to $115 up from the previous target of $100, while retaining an Overweight rating on the stock. The adjustment follows Brinker's first-quarter fiscal year 2025 results, which surpassed consensus estimates for adjusted earnings per share (EPS), EBITDA, and same-store sales (SSS) growth.
The company's SSS growth accelerated through the fourth quarter and continued into double digits in October, outpacing industry peers. Brinker's current SSS momentum and stronger-than-expected profitability during the first quarter led to a considerable revision of the full-year revenue and EPS forecast.
KeyBanc's analyst believes that Brinker is making strategic decisions that bolster the long-term sustainability of the business and are beginning to significantly contribute to earnings growth. The raised price target reflects the company's sustainable momentum and improved profitability, which the analyst believes should result in a higher valuation multiple.
The new price target of $115 is based on approximately 20 times KeyBanc's fiscal year 2026 EPS estimate for Brinker. The analyst's optimism is rooted in the company's performance and strategic direction, which are expected to continue to drive positive financial outcomes.
In other recent news, Brinker International has been the subject of several notable adjustments by financial analysts. Evercore ISI increased its price target for Brinker from $90 to $110, maintaining an In Line rating. The firm revised upward its earnings per share (EPS) estimates for fiscal year 2025 to $5.66, a 38% year-over-year increase. This followed Brinker's first-quarter results, which showed a 13% increase in consolidated comparable sales and a rise in EPS to $0.95 from $0.28 in the previous year.
BMO Capital Markets shifted its rating for Brinker from Outperform to Market Perform, while raising its price target for the company's shares from $80.00 to $105.00. Similarly, JPMorgan (NYSE:JPM) moved from an Overweight to a Neutral rating, and increased the price target to $100 from the previous $67. These changes were made following Brinker's strong performance in the first quarter of fiscal year 2025.
Brinker International also reported a 14.1% increase in comparable store sales for Chili's and a 4.2% rise for Maggiano's. The company's strong start to fiscal 2025, marked by increased sales and profitability, sets a positive tone for the forthcoming quarters. These are recent developments that reflect Brinker's confidence in its growth trajectory and its commitment to operational efficiency.
InvestingPro Insights
Brinker International's recent performance aligns with KeyBanc's optimistic outlook, as evidenced by InvestingPro data. The company's revenue growth of 6.82% over the last twelve months, with a notable 12.34% increase in the most recent quarter, supports the analyst's view on Brinker's strong sales momentum.
InvestingPro Tips highlight that 11 analysts have revised their earnings upwards for the upcoming period, indicating growing confidence in Brinker's financial trajectory. This aligns with KeyBanc's raised price target and positive forecast. Additionally, the stock's significant return over the last week (11.14%) and strong return over the last month (36.22%) reflect the market's positive reaction to Brinker's recent performance.
It's worth noting that Brinker is trading near its 52-week high, with its current price at 96.55% of the peak. This, coupled with the strong returns over various timeframes (56.04% over three months, 94.5% over six months, and an impressive 207.34% over the past year), suggests that investors are recognizing the company's improved performance and future potential.
For investors seeking more comprehensive analysis, InvestingPro offers 17 additional tips for Brinker International, providing a deeper understanding of the company's financial health and market position.
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