Why Did SunTrust Robinson Humphrey Upgrade Darden?



SunTrust Robinson recommendation

On June 7, SunTrust Robinson Humphrey upgraded Darden Restaurants (DRI) from “hold” to “buy” and raised its price target from $104 to $110, which represents a 21% return potential based on its current stock price.

SunTrust Robinson Humphrey analyst Jake Bartlett has stated that fiscal Q4 2018 risks have been priced into the company’s current stock price. He added that strong same-store sales growth, unit growth, acquisitions, and dividends could expand the company’s valuation beyond fiscal 2018.

Other analysts’ recommendations

Of the 26 analysts following Darden, 57.7% recommend “buy,” 38.5% recommend “hold,” and 3.8% recommend “sell.” Analysts, on average, expect Darden’s stock price to reach $101.19 in the next 12 months, which represents a 10.7% return potential.

Darden’s stock price moves in tandem with analysts’ ratings. When analysts upgrade the stock, the stock tends to rise, and vice versa. Although Darden is currently trading below analysts’ 12-month target price, the stock may not be an automatic “buy.” Investors are advised to analyze analysts’ estimates before making investment decisions.

Peer comparison

Peers’ stock prices and return potential are as follows:

  • Texas Roadhouse (TXRH): a price target of $65.41 with a 2.7% return potential
  • Brinker International (EAT): a price target of $45.44 with a -4.0% return potential
  • Bloomin’ Brands (BLMN): a price target of $24.58 with a 15.7% return potential 

Next, we’ll look at Darden’s stock performance.

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