Analysts downgrade Cheesecake Factory
Cheesecake Factory Inc. shares fell 7.1% on Thursday after at least three analysts lowered their ratings on the Calabasas Hills-based company because it said second-quarter sales growth wouldn’t meet Wall Street expectations.
Bear Sterns & Co. dropped its rating to “peer perform” from “outperform,” and Raymond James Financial Inc. lowered its rating to “outperform” from “strong buy.” CIBC World Markets Inc. downgraded to “sector perform” from “sector outperform” and decreased its price target to $27 from $35. Goldman Sachs maintained a “buy” rating but lowered its target to $32 from $35.
On Wednesday, Cheesecake Factory Chief Financial Officer Michael Dixon said at an investor conference that growth would be in the 14.5%-to-15.5% range, not the 17.5% expected, citing “continuing softness” in the casual dining business.
High gasoline prices, rising interest rates and higher minimum payments some consumers must now make on credit card purchases have eaten into sales of a number of sit-down eateries in recent months, including Chili’s and Applebee’s.
Started in 1978, the Cheesecake Factory chain is best known for its more than two dozen cheesecake varieties, including such mouthfuls as White Chocolate Peanut Butter Truffle Cheesecake and Craig’s Crazy Carrot Cake Cheesecake.
The company operates 125 Cheesecake Factory restaurants in 31 states and the District of Columbia and nine upscale Grand Lux Cafes.
Shares of the company fell $1.90 to $24.85.
Bloomberg News was used in compiling this report.
