Morgan Keegan Ups RARE Hospitality

Analyst Robert Derrington says the company can remain relevant in a tough consumer environment

Morgan Keegan upped RARE Hospitality International (RARE ) to outperform from market perform.

Analyst Robert Derrington cited the stock's attractive valuation, as well as his confidence in the company's ability to refine its brands and remain relevant in a tough consumer environment. He trimmed his $1.53 2005 earnings per share estimate to $1.49, factoring in weaker third quarter same- store sales and higher operating costs (including natural gas). While he thinks earnings per share estimates may require revision in this environment, he thinks long term prospects of a slightly more favorable 2006 commodity environment, more effective marketing, and the 53rd week of operations support his revised $1.80 (cut from $1.88 to reflect higher operating costs) 2006 earnings per share estimate.

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