On Monday, Stifel, a financial services company, increased its price target on shares of Brinker International (NYSE:EAT) to $120 from the previous target of $110, while maintaining a Buy rating on the stock. The adjustment comes after Brinker's recent 10-Q filing, which prompted Stifel to update their financial model for the company.
According to the analyst, Brinker's quarter-to-date sales momentum has led to an increase in the firm's second-quarter and full-year comparable sales (comp) projections. The new full-year same-restaurant sales (SRS) projection stands at approximately 9.5%, up from the 5.8% previously estimated and slightly above the Street's expectation of 9.3%.
The positive adjustment in sales and revenue expectations was partially balanced by higher general and administrative expenses, including incentive compensation, and increased depreciation projections. Despite these higher costs, the analyst expressed optimism about the quarter's performance and the potential for the Chili's brand renewal efforts to drive sustainable sales and traffic growth.
The analyst also highlighted early indications of progress at Maggiano's, Brinker's other restaurant brand. The improvements at Maggiano's are expected to significantly contribute to the company's EBITDA growth over a longer-term horizon.
In light of these developments, Stifel has raised its full-year fiscal year 2025 earnings per share (EPS) estimate for Brinker to $5.40, up from the previous estimate of $4.75, which is also higher than the consensus estimate of $5.32. The new 12-month price target of $120 reflects the firm's confidence in Brinker's growth trajectory and operational improvements.
In other recent news, Brinker International has reported a strong first quarter for fiscal year 2025, with a significant increase in total revenues and consolidated comparable sales. The company's adjusted diluted earnings per share (EPS) experienced a substantial rise, attributed to effective marketing campaigns, operational efficiencies, and strategic investments.
Brinker saw a 14.1% increase in comparable store sales for Chili's and a 4.2% rise for Maggiano's, despite a decrease in traffic for the latter.
The company's positive performance led to adjustments by financial analysts. KeyBanc Capital Markets raised its price target for Brinker to $115, retaining an Overweight rating on the stock. Similarly, Evercore ISI increased its price target for Brinker to $110, maintaining an In Line rating.
BMO Capital Markets shifted its rating from Outperform to Market Perform, while raising its price target to $105. JPMorgan (NYSE:JPM) also adjusted its stance, moving from an Overweight to a Neutral rating, and increasing the price target to $100.
These are recent developments that reflect Brinker's confidence in its growth trajectory and its commitment to operational efficiency. The company's strong start to fiscal 2025, marked by increased sales and profitability, sets a positive tone for the forthcoming quarters.
InvestingPro Insights
Recent data from InvestingPro aligns with Stifel's optimistic outlook on Brinker International (NYSE:EAT). The company's market cap stands at $4.66 billion, with a P/E ratio of 25.76, indicating investor confidence in its earnings potential. Notably, Brinker's revenue growth of 8.39% over the last twelve months and a robust 12.49% growth in the most recent quarter support the analyst's projections for increased sales.
InvestingPro Tips highlight that 15 analysts have revised their earnings upwards for the upcoming period, reinforcing Stifel's positive EPS adjustment. The stock's strong performance is evident in its impressive 197.39% price return over the past year, with the share price currently trading near its 52-week high at 97.92% of that level.
These insights complement Stifel's analysis of Brinker's growth potential, particularly in light of the Chili's brand renewal efforts and improvements at Maggiano's. For investors seeking a deeper understanding of Brinker's financial health and market position, InvestingPro offers 16 additional tips, providing a comprehensive view of the company's prospects.
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