Wells Fargo, a multinational financial services company, recently downgraded Brinker International’s rating from “equal weight” to “underweight.” Brinker International is a restaurant company that owns and operates Chili’s Grill & Bar and Maggiano’s Little Italy. This rating change could impact Brinker International’s stock price and investment potential.
Wells Fargo Downgrades Brinker International Rating
Wells Fargo Securities, the investment banking division of Wells Fargo, downgraded Brinker International’s rating from “equal weight” to “underweight.” The downgrade comes after Wells Fargo hosted meetings with various restaurant industry experts and conducted a survey of 4,000 consumers. The results revealed that Chili’s, Brinker International’s largest brand, is losing market share to its competitors.
Wells Fargo also lowered its earnings per share (EPS) estimates for Brinker International for the current fiscal year and the next fiscal year. They cited concerns about the company’s ability to grow same-store sales and traffic, which they expect to remain sluggish. Additionally, they highlighted concerns about the company’s margins, which they expect to be pressured by rising labor costs and commodity inflation.
Brinker International Receives Underweight Rating from Wells Fargo
As a result of the downgrade, Brinker International now has an “underweight” rating from Wells Fargo. This rating means that Wells Fargo believes Brinker International’s stock will underperform compared to the average return of the industry over the next 12 months. The downgrade could cause investors to sell their shares in Brinker International, which could further lower the stock price.
Brinker International responded to the downgrade by stating that they are committed to their long-term growth strategy. They also said that they remain focused on improving Chili’s performance and delivering value to their shareholders. However, the company’s ability to turn around Chili’s and improve its market share remains to be seen.
Wells Fargo’s downgrade of Brinker International’s rating from “equal weight” to “underweight” highlights concerns about the company’s ability to grow same-store sales, margins, and market share. This rating change could impact Brinker International’s stock price and investment potential. The company’s response to the downgrade indicates that they are committed to their long-term growth strategy, but only time will tell if they can turn around Chili’s and improve its market share.
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