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Investing.com - Truist Securities downgraded Denny’s Corporation (NASDAQ:DENN) from Buy to Hold and maintained its price target of $6.00 following the restaurant chain’s announced acquisition agreement. The stock, currently trading at $4.11, has taken a significant hit recently, with InvestingPro data showing a one-week decline of 8.87% and a year-to-date drop of 32.07%.
The downgrade comes after Denny’s revealed it agreed to be acquired for $6.25 per share, with the transaction expected to close in the first quarter of 2026. This acquisition price sits slightly above the Fair Value calculated by InvestingPro analysts, suggesting a reasonable premium for shareholders.
Truist Securities noted the acquisition price represents a 7.9x EV/EBITDA multiple based on 2026 estimates, which aligns with the recent three-year average but falls below the pre-COVID average of 12.6x.
The firm also highlighted Denny’s disappointing third-quarter 2025 same-store sales and adjusted EBITDA results, which it attributed to challenging macroeconomic conditions, particularly affecting Denny’s core lower-income consumer base.
Truist Securities observed that this deal continues a trend of microcap restaurant chain acquisitions, which the firm views as an encouraging development in the sector.
In other recent news, Denny’s Corporation announced it will be acquired by a group led by TriArtisan Capital Advisors in an all-cash deal valued at approximately $620 million. Denny’s stockholders are set to receive $6.25 per share, representing a significant premium over recent stock prices. Additionally, Denny’s has amended its existing credit agreement, extending the maturity date to January 2027 while reducing borrowing capacity from $400 million to $325 million. The restaurant chain’s recent financial results revealed a 1.3% decline in same-store sales, aligning with forecasts but falling short in earnings per share and EBITDA. Following these results, Piper Sandler lowered its price target for Denny’s to $4, maintaining a Neutral rating. Truist Securities also reduced its price target to $6, while still keeping a Buy rating, citing potential upside. KeyBanc maintained a Sector Weight rating, reflecting a cautious outlook amid economic challenges. These developments highlight the ongoing adjustments and market reactions surrounding Denny’s Corporation.
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