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Investing.com - Evercore ISI upgraded Brinker International (NYSE:EAT) stock rating from In Line to Outperform on Thursday, raising its price target to $210.00 from $190.00. The restaurant operator, currently valued at $7.1 billion, has delivered an impressive 121% return over the past year according to InvestingPro data.
The upgrade reflects Evercore’s confidence in Brinker’s sustainable same-store sales growth potential, which the firm attributes to improving customer satisfaction measures, effective marketing, and growth from new units and remodels. This optimism appears well-founded, with InvestingPro data showing robust revenue growth of 22% in the last twelve months.
Evercore’s new price target is based on a discounted cash flow analysis and represents 17 times the firm’s fiscal year 2027 earnings per share estimate of $12.19, up from a previous estimate of $11.93, implying 16% year-over-year growth.
The firm projects 17% sustainable EPS growth for Brinker, factoring in 5% same-store sales growth at Chili’s (3% price and 2% traffic), building to over 2% net unit growth, 35 basis points of operating margin expansion, and 5-6% annual reduction in shares outstanding.
Evercore noted that with a sub-15x price-to-earnings ratio and clean balance sheet (0.5x net debt to EBITDA and sub-2x adjusted debt to EBITDAR), Brinker is the least expensive name in its restaurant coverage on a growth-adjusted basis, with a 0.9x price/earnings-to-growth ratio.
In other recent news, Brinker International has reported strong financial performance for the fourth quarter of fiscal 2025, with earnings per share reaching $2.49, surpassing the consensus estimate of $2.47. This performance was bolstered by robust comparable sales at its Chili’s restaurant chain. The company also experienced a notable increase in same-store sales growth, approximately 24%, according to Evercore ISI. Following these results, several financial firms have adjusted their outlooks for Brinker International. Goldman Sachs raised its price target to $207, maintaining a Buy rating, while Stifel reiterated its Buy rating with a $215 target. BMO Capital increased its price target from $150 to $170, maintaining a Market Perform rating. Piper Sandler also adjusted its price target upward to $168, while Evercore ISI raised it to $190. These changes reflect the positive trajectory Brinker International has achieved through operational improvements and effective marketing strategies.
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