What Happened?
Shares of casual restaurant chain Brinker International (NYSE: EAT) jumped 1.3% in the morning session after Evercore ISI upgraded the stock to 'Outperform' from 'In Line' and raised its price target to $210 from $190. The upgrade is based on the belief that the owner of Chili's is positioned for sustainable earnings growth. Evercore ISI analyst David Palmer cited restaurant remodels, menu upgrades, and new unit openings as key drivers for this positive outlook. The brokerage also increased its long-term earnings forecasts for Brinker, projecting a 17% annual growth in earnings per share (EPS) through the 2027 fiscal year. This upgrade contributed to a broader positive trend, with the average analyst price target for the company showing a recent increase.
After the initial pop the shares cooled down to $160.77, up 1% from previous close.
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What Is The Market Telling Us
Brinker International’s shares are very volatile and have had 25 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 7 months ago when the stock gained 15% on the news that the company reported strong fourth-quarter (fiscal Q2 2025) results that convincingly beat analysts' revenue and EPS expectations.
All brands posted growth, but Chili's led with a 31.4% increase in comparable restaurant sales, followed by a 27.4% rise at Brinker. Notably, growth benefited from an increase in both traffic and pricing, which contributed to the earnings beat. Looking ahead, EAT raised its full-year revenue and EPS guidance. Zooming out, we think this was a great quarter.
Brinker International is up 16.8% since the beginning of the year, but at $160.77 per share, it is still trading 15% below its 52-week high of $189.14 from February 2025. Investors who bought $1,000 worth of Brinker International’s shares 5 years ago would now be looking at an investment worth $3,520.
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