Darden: Analysts’ Recommendations before Its Fiscal 1Q18 Earnings
Despite the recent fall in Darden Restaurants’ (DRI) stock price, analysts expect its stock price to reach $93.60 in the next 12 months, which represents a return potential of 12.4%.
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The measures adopted by the company’s management, like implementing technological advancement, remodeling restaurants, and investing in improving the quality of its food and services could have compelled analysts to raise their 12-month target price from $86.86 before the announcement of its fiscal 4Q17 earnings.
The target price and return potential of Darden’s peers are as follows:
- Texas Roadhouse (TXRH) – target price of $50.76 with a return potential of 9.5%
- Bloomin’ Brands (BLMN) – target price of $21.50 with a return potential of 27.8%
- Brinker International (EAT) – target price of $38.64 with a return potential of 20.7%
Of the 25 analysts that follow Darden, 28.0% recommend a “buy,” 68.0% recommend a “hold,” and 4.0% recommend a “sell.”
After posting strong fiscal 4Q17 earnings on June 27, 2017, many analysts have raised their 12-month target price for Darden. On June 29, 2017, KeyBanc Capital Markets raised its target price from $100 to $105. On June 28, 2017, Royal Bank of Canada raised its target price from $86 to $96, while Barclays increased its target price from $91 to $99.
Currently, Darden is trading below analysts’ average target price. However, it doesn’t mean an automatic “buy.” Investors should carefully analyze the various parameters that we discussed in this series before making any investment decisions.
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