Analysts at Jefferies downgraded Darden Restaurants (NYSE:DRI) to “underperform” from “hold,” citing risk to growth in the near term and saying weak traffic trends observed for its Olive Garden brand could continue.
“We believe recent traffic softness at the core OG brand could persist, with lower-end weakness and the looming value/competitive landscape incremental headwinds shrouding visibility into sustaining historical SSS/traffic outperformance,” Jefferies analysts wrote in a July 11 research note.
The research firm said it is “more cautious” about the restaurant chain’s prowess to compete against others in casual dining in a promotional setting and against lower price points in both fast casual and QSR, among other reasons for the rating downgrade.
Jefferies has cut its price target on DRI to $124 from $154, which implies a 10% downside to its shares.
Fifteen out of thirty Wall Street analysts have rated DRI a “strong buy,” four have given it a “buy,” and the rest have rated it a “hold.”
DRI is down 15.4% so far this year as of Wednesday’s close, compared to an 18.1% rise in the benchmark S&P index.