CIBC World Cuts Brinker to Sector Perform

The restaurant operator posted flat May same-store sales

CIBC World downgraded Brinker International (EAT ) to sector perform.

Analyst John Glass says he's downgrading from sector outperform on decelerating same-store sales at Chili's and Mac Grill (90% of profits). He notes May same-store sales rose just 0.5%, below his 2.4% estimate.

Glass says he has yet to hear management articulate clear strategies on how it plans to revive softening sales. He cut the $2.39 fiscal 2005 (Jun.) EPS estimate to $2.33. He sees $2.16 fiscal 2004 EPS.

Glass believes some, but not all, of Brinker's issues stem from larger industry issues, particularly as casual-dining sales decelerate. He prefers names with strong sales and cost visibility, such as Applebee's. He cut his $47 target to $40.

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