Banc of America downgraded Darden Restaurants (DRI ) to market perform from buy.
Analyst Andrew Barish says October same-store sales were below estimates. He says Red Lobster's promotion was less effective than usual; also, year-ago sales strength tied to "Dine Out for America" held back results by about 100 basis points.
Barish notes the company sees $0.21-$0.22 second quarter earnings per share, and still thinks it can achieve 3%-5% growth in comparable sales at both Red Lobster and Olive Garden for fiscal 2003 (May).
Due to the October shortfall, however, he takes a more cautious view of the comany's outlook. He cut the $0.24 second quarter earnings per share estimate to $0.22. Barish forecasts $1.47 for fiscal 2003, and $1.68 for fiscal 2004.