An analyst from UBS upgraded his recommendation for Darden from Neutral to Buy on bullish technical indicators.
JP Morgan Analyst John Ivankoe dropped his estimates of Darden's 2009 earnings from $2.74 per share to $2.05 per share based on expectations of a 3.5% decrease in same store sales in the coming year.
Darden Restaurants reported Q1 income fell 23%, despite an increase a 21% increase in revenue. CEO Clarence Otis blamed a weak consumer spending that was "much weaker this quarter than we had anticipated." He also painted a bleak picture moving forward predicting that "consumers will remain under pressure" he said.
Darden, parent of the Olive Garden and Red Lobster chains warned that it's fiscal first quarter profit would come in below already tepid expectations. The company also lowered its full year earnings guidance.
Darden swung to a fourth-quarter profit of $101.8 million, just shy of analyst estimates. Revenue rose 25% to $1.83 billion. Same-store sales were mixed across the company's portfolio of restaurants: sales rose 5.8% at Olive Garden, while falling 0.2% at Red Lobster.
Darden reported a 30% drop in fiscal second-quarter profits because of acquisition costs related to Rare Hospitality International, as well as a drop in consumer spending. This negative announcement caused stock price to drop from $36.34 USD to $28.60 over just one day.
