A dark pool trade occurred in DRI stock on Friday, September 25, 2020.

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A flurry of analyst upgrades occurred in DRI stock on September 25, 2020, after the company reported earnings and revenue beats.

MKM Partners analyst Brett Levy raised the firm’s price target on Darden to $115 from $110 and keeps a Buy rating on the shares. The company’s Q1 earnings beat highlighted the strength of its brands and operations, the analyst tells investors in a research note, stating that he remains constructive on its prospects despite the “uncertain” landscape. Cost management and execution should drive “solid profitability” for Darden in spite of the capacity restriction headwinds, Levy states.

BMO Capital analyst Andrew Strelzik raised the firm’s price target on Darden to $96 from $84 but keeps a Market Perform rating on the shares. The company’s “efficient” and “impressive” cost management more than offset its softer comps, leading to a Q1 earnings beat, the analyst tells investors in a research note. Strelzik is also raising his FY21 EPS view to $4.45 from $2.79 but prefers to remain on the sidelines due to Darden’s valuation and the “largely uncertain” macro and industry backdrop.

Truist analyst Jake Bartlett raised the firm’s price target on Darden to $128 from $100 and keeps a Buy rating on the shares after its better than expected Q1 results. The company has used the COVID-19 disruption to “reimagine almost every aspect of their business,” driving margins some 100-150bps higher than its pre-COVID levels, the analyst tells investors in a research note. Capacity restrictions are muting the recovery of Darden’s comps relative to its peers, but sales should improve as restrictions ease, Bartlett states.

Raymond James analyst Brian Vaccaro raised the firm’s price target on Darden to $115 from $100 and keeps an Outperform rating on the shares following the company’s “strong” Q1 margin performance. Vaccaro believes Olive Garden trends have improved in September, with additional room for improvement if California continues to relax dining rooms restrictions and additional partitions are installed.

JPMorgan analyst John Ivankoe raised the firm’s price target on Darden to $105 from $82 and keeps an Overweight rating on the shares following the company’s better than expected Q1 results. Darden’s margins “amazed” in a difficult sales environment while the relaxation in government restrictions should be a key driver in an Olive Garden same-store-sales recovery, especially as the brand is not using delivery or outdoor dining as an offset to dining room capacity, Ivankoe tells investors in a research note.

Morgan Stanley analyst John Glass raised the firm’s price target on Darden to $112 from $71 following the company’s quarterly report. While sales modestly missed expectations, margins “were the story of the quarter, and a clear upside surprise,” according to Glass, who thinks the company’s restructuring actions should benefit overhead expenses in quarters to come. As a result of these savings, which he thinks are sustainable post-pandemic and won’t need to be reinvested in the business as sales recover, Darden now believes that it can achieve its pre-COVID EBITDA dollars even at a 10% reduced level of sales, noted Glass, who keeps an Equal Weight rating on the shares.

RBC Capital analyst Christopher Carril raised the firm’s price target on Darden to $107 from $97 and keeps an Outperform rating on the shares. The analyst cites the company’s “strong” Q1 earnings beat that highlighted its “best in class” cost management and longer-term margin upside. While sales recovery across the portfolio is “uneven”, further reductions in restrictions related to the pandemic is a “potential source of upside” to Darden’s guidance, the analyst tells investors in a research note.

BTIG analyst Peter Saleh raised the firm’s price target on Darden to $108 from $100 and keeps a Buy rating on the shares. The analyst notes that the company’s profitability, guidance, and restored dividend “more than offset” the “disappointing” same-store sales. Saleh is confident in Darden’s ability to continue to claw back its pre-COVID profit levels in the medium term in spite of the “muted” sales environment. The company is now operating a “leaner, more efficient” business as seen its its menu simplification and restaurant margin performance, the analyst tells investors in a research note.

On September 24, 2020, Darden reported Q1 adjusted cont ops EPS of 56c versus the consensus estimate of 5c. The company reported Q1 revenue of $1.53B versus the consensus estimate of $1.56B.

First Quarter 2021 Financial Highlights, Comparisons to First Quarter Last Year

Total sales of $1.53 billion, a decrease of 28.4% driven by negative blended same-restaurant sales of 29.0% and partially offset by the addition of 14 net new restaurants.

Same-restaurant sales by segment:

(28.2)% for Olive Garden

(39.1)% for Fine Dining

(18.1)% for LongHorn Steakhouse

(39.0)% for Other Business

  • Reported diluted net earnings per share from continuing operations of $0.28 as compared to last year’s reported diluted net earnings per share of $1.38
  • Adjusted diluted net earnings per share from continuing operations of $0.56, after excluding $0.28 related to corporate restructuring costs, as compared to reported diluted net earnings per share of $1.38
  • Reported net earnings from continuing operations of $37 million
  • Adjusted EBITDA of $185 million

“The actions we continued to take in response to COVID-19, which include being laser-focused on execution and strengthening our business model, resulted in significantly improved first quarter performance that exceeded expectations,” said CEO Gene Lee. “I’m incredibly proud of how our restaurant teams have adapted to our new operating environment and their ongoing dedication to safety and delivering exceptional guest experiences.”

finviz dynamic chart for  dri