Sector Snap: Brinker, Red Robin and Ruth's

Analyst downgrades Brinker International, raises price target on Red Robin and Ruth's

• By Betsy Vereckey, AP Business Writer
• On 2:10 pm EDT, Friday September 18, 2009

NEW YORK (AP) -- Brinker International Inc. got a ratings downgrade Friday from an analyst who says its stock price has finally risen high enough to meet his price target.

The analyst, Bryan C. Elliott of Raymond James, raised his price targets for two other restaurant operators, Red Robin Gourmet Burgers Inc. and Ruth's Hospitality Group Inc.

Elliott downgraded Brinker International to "Market Perform" from "Outperform" and said the stock price has hit his price target of $16.50. So far this year, the stock has risen 57 percent.

Elliott said the company, which operates Chili's Grill & Bar and Maggiano's Little Italy, had soft sales in its June quarter and in July. He said he doesn't think the stock price will fall much further.

Last month, the company said it swung to a fiscal fourth-quarter profit, helped by the sale of its Romano's Macaroni Grill business, but Brinker also offered a lower-than-expected outlook.

In afternoon trading Friday, its shares declined 9 cents to $16.46.

Meanwhile, Elliott raised his price target on Red Robin and Ruth's Hospitality, both of which he rates as "Outperform."

Elliott raised his target on Red Robin to $24.50 from $19, citing its strong free cash flow and its stock price, which Elliott said is the cheapest in its peer group.

Shares of the company have risen 31.2 percent so far this year. The new price target implies shares have room to rise 11 percent from Thursday's close at $22.08.

In afternoon trading, shares rose 61 cents, or 28 percent, to $22.69.

On Ruth's Hospitality, which operates Ruth's Chris Steak House locations and Mitchell's Fish Market restaurants, Elliott raised his target to $5 from $4.50.

Shares have room to rise around 14.7 percent from Thursday's close of $4.36, based on Elliott's new price target.

Elliott also likes Ruth's free cash flow and said the company will benefit from a potential recovery in business entertainment spending and high-end consumer spending.

In afternoon trading, the stock rose 35 cents, or 8 percent, to $4.71.

Buzz up!