BB&T Capital downgraded Landry's Restaurants (LNY ) to hold from buy.
Analyst Barry Stouffer says Landry's earnings shortfall was attributed to lower-than-expected June sales in the Joe's Crab Shack division. He says management blamed weakness on poor weather, difficult comparison-store sales, and less advertising and promotion.
Stouffer notes there's no mention of a same-store sales fall in June in Landry's press release. He says the second quarter represents the third straight quarterly same-store sales decline, giving him less confidence in his earnings per share estimates and the potential for upside surprises.
He notes Landry's stock has risen to $23.93, from $18.70 in the last two months -- surpassing his $23 target. Stouffer cut the 67 cents second-quarter earnings per share estimate to 63 cents, and trimmed the $1.76 2003 estimate to $1.71.