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Darden Restaurants’ Stock Inches Higher Amid Reopening, Analyst Boost

By Rhian Hunt - May 20, 2020 at 4:02PM

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Investors seem to be taking a cautious approach to the casual dining stock.

LongHorn Steakhouse and Olive Garden parent Darden Restaurants (DRI 0.27%) is trading slightly higher following its restaurant reopening news yesterday. Today, 49% of its locations are open for diners, and the company plans to expand the number to 65% by the end of the month. The restaurant company also attracted a price target upgrade from an analyst at financial services firm Cowen Group today, also possibly helping nudge its stock upward.

The company has adopted several measures in an effort to prevent coronavirus infections at its newly opened restaurants. A strict cleaning and disinfection regimen is in place at all locations, and employees get health checks such as temperature scans when they arrive on the job in the morning.

Steaks plate in front of a fire.

Image source: Getty Images.

Darden asks diners to make reservations in advance to cut down on contact, and requests they wear masks except when actually seated and eating. CEO Gene Lee said, "Early signs show that our loyal guests are grateful for the opportunity to dine-in with us, and they appreciate the added safety measures we have implemented." 

The dining company already drew one analyst's favorable notice yesterday, when Brett Levy of MKM Partners gave it a buy rating and a $90 price target. Today, Cowen analyst Andrew Charles joined MKM in predicting a tasty rebound for Darden.

The Cowen research note predicts Darden Restaurants will eke out only slight improvements during its fiscal fourth quarter. For instance, Charles asserts that same store sales, instead of falling 50%, will drop 149% instead. He also said, "We continue to assume a 50% decremental margin on lost sales" for fiscal Q1 2021.

Nevertheless, Charles raised Darden's price target from $63 per share to $83 per share. He also continued to rate it at market perform.

Rhian Hunt has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Darden Restaurants, Inc. Stock Quote
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