Brinker International Remains a Compelling Pick in the Full Service Segment, Morgan Stanley Says
Brinker International (EAT) remains a compelling pick in the full-service segment and potential stock price pullbacks are good opportunities for investors to get involves, Morgan Stanley said in a Wednesday research report.The company posted in-line fiscal Q3 results, and the brokerage said double-digit earnings growth, supported by remodels and unit growth, looks plausible in the future.While Q3 same-store sales were below expectations as weather and holiday factors posed a 2.1% headwind to revenue growth, trends improved as the quarter progressed with potential mid-single-digit comps growth in April amid positive traffic, analysts wrote.For fiscal Q4, Morgan Stanley now expects adjusted EPS of $3.10 from $3.05 earlier. For the full-year fiscal 2026, it now expects adjusted EPS $12.52 from $12.37.Restaurant margins declined in Q3 from a year earlier amid rising commodity inflation and restaurant expenses, but menu innovation in 2027 is where the company could see an opportunity to drive trade-up, according to the note.The brokerage reiterated its overweight rating on the stock and boosted its price target to $207 per share from $205.Price: $150.88, Change: $+3.07, Percent Change: +2.08%