Piper Sandler analyst Nicole Miller Regan downgraded Cheesecake Factory (NASDAQ: CAKE) from Overweight to Neutral with a price target of $44.00 (from $65.00).
The analyst comments "We maintain a favorable bias toward The Cheesecake Factory given its position as a human capital-focused, best-in-class operator of leading experiential restaurant brands. That said, we are rationalizing our valuation multiple to ~10x EV/EBITDA, which is in-line with the stock's 16-year average (vs. our prior ~13x multiple) and (we believe) more appropriate in the current environment. Our lowered EPS estimates reflect incremental labor costs offset (to some extent) by marginally higher FY23 development at the core Cheesecake Factory. Looking forward, our Neutral rating could prove conservative given continued strength in consumer demand for experiential dining concepts and/or from the company's eventual revisit of capital allocation priorities across dividends, debt pay down, or share repurchase. We are moving to a Neutral rating and $44 price target on CAKE shares based on ~10x our FY22E EV/EBITDA; this equates to ~15x on a PE basis."
For an analyst ratings summary and ratings history on Cheesecake Factory click here. For more ratings news on Cheesecake Factory click here.
Shares of Cheesecake Factory closed at $39.15 yesterday.
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