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On Monday, BMO Capital Markets maintained its Market Perform rating on Brinker International (NYSE:EAT) shares but increased the price target to $125 from the previous $105. The adjustment reflects the firm's positive outlook on the company's strong momentum, particularly for the second quarter of fiscal year 2025 and the remainder of the year. The restaurant operator, currently valued at $6.64 billion, has seen its stock surge nearly 280% over the past year, trading close to its 52-week high of $155.13. According to InvestingPro analysis, the stock appears to be trading above its Fair Value.
The decision to raise the price target and earnings estimates comes as BMO Capital Markets anticipates Brinker International to outperform consensus forecasts for the upcoming quarter and beyond. Analysts at the firm have revised their full-year 2025 earnings per share (EPS) projection to $6.78, with an even higher expectation for fiscal year 2026 at $7.87 per share. InvestingPro data shows that 10 analysts have recently revised their earnings estimates upward, with current FY2025 EPS forecasts at $6.90. The stock trades at a P/E ratio of 35.7x, suggesting high growth expectations. Despite these optimistic revisions, analysts acknowledge that their estimates may still be on the conservative side, especially as they expect comparable sales to normalize by the fourth quarter of fiscal year 2025.
Brinker International's robust sales momentum has been a key factor behind the analyst's confidence in the sustainability of the Chili's brand turnaround. The company's performance has been strong enough to warrant a higher price target, signaling a belief in the ongoing strength of its operational results.
However, BMO Capital Markets reiterated its Market Perform rating, indicating that while the immediate outlook for Brinker International is positive, there are expectations that sales trends will eventually stabilize. As sales normalize, analysts foresee a potential compression in valuation over time, which is reflected in the unchanged rating despite the raised price target. InvestingPro subscribers have access to 15 additional ProTips and comprehensive valuation metrics that can help assess whether this momentum can be sustained. Get the full picture with InvestingPro's exclusive Research Report, available for over 1,400 US stocks including Brinker International.
In other recent news, Brinker International has been the subject of numerous analyst reviews following robust earnings and revenue results. KeyBanc Capital Markets revised its rating on Brinker from "Overweight" to "Sector Weight," citing a high stock valuation. Morgan Stanley (NYSE:MS) upgraded Brinker's stock from Underweight to Equalweight, increasing the price target to $115. Goldman Sachs initiated coverage on Brinker with a Buy rating and a price target of $150.00, acknowledging Chili's as a significant revenue stream for the company.
Brinker International has also granted substantial stock-based compensation awards to its top executives, with CEO and President Kevin Hochman receiving performance shares with a target value of $20 million. Other executives received significant awards as well, reflecting the company's confidence in its growth trajectory.
Recent developments include Piper Sandler raising its stock target for Brinker by over 55% following strong Q1 results, while Stifel increased its price target and maintained a buy rating, emphasizing the company's sales momentum. These developments reflect Brinker's commitment to operational efficiency and its strong start to the fiscal year, marked by increased sales and profitability.
Analyst firms such as KeyBanc Capital Markets, Morgan Stanley, Goldman Sachs, Piper Sandler, and Stifel have provided their insights and expectations on Brinker's future performance. However, these are merely their views and should not be considered as definitive indications of the company's future performance.
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