J.P. Morgan upgraded Cheesecake Factory (CAKE) to neutral from underweight.
Analyst John Ivankoe says the upgrade follows J.P. Morgan sponsored meetings with management. He says "normal" weather brings a return to "normal" comparison sales in the past nine weeks. He raised the 0% second-half comparison-sales assumption to 1%, noting that easy weather comparisons will continue through the first half of 2004.
Ivankoe says it's apparent that pricing will be taken as necessary, perhaps meaningfully above the typical 1.5%, to offset any increase in costs throughout 2004. He thinks significant pricing can be taken without influencing consumer behavior. The company maintained its outlook for 20% earnings per share growth. Ivankoe sees $1.11 2003 earnings per share, and $1.33 in 2004.