Sector wrap: Fast-casual restaurants rise

Chipotle, Red Robin gain as Jefferies analyst says food costs manageable, upbeat on 2nd half

Associated Press

NEW YORK (AP) -- Shares of fast-casual restaurants rose Tuesday after a Jefferies analyst upgraded the stock ratings of Red Robin Gourmet Burgers Inc. and Chipotle Mexican Grill Inc.

Fears that food and health care costs would rise this year were never realized, said analyst Andy Barish in a note to clients. Food costs were "relatively favorable," said Barish, and health insurance penalties were pushed back by President Barack Obama to 2015.

He thinks that the second half of the year will be better for fast-casual restaurants than the first half.

Barish upgraded Red Robin to a "Buy" rating from "Hold" and Chipotle to "Hold" from "Underperform."

Shares of Red Robin rose $3.87, or 6 percent, to close at $67.89 Tuesday. Chipotle stock added $3.95, or 1 percent, to close at $407.55.

But he downgraded Bravo Brio Restaurant Group Inc. to "Hold," citing concerns about slowing sales growth. He also cut Panera Bread Co. to "Hold" as he believes the company will spend more on its business to fix some recent operational problems. Shares of Bravo Brio fell 12 cents to $15.63. Panera shares rose 6 cents to $173.72.

Here's a look at how some other fast-casual restaurant stocks fared in trading Tuesday:

—Buffalo Wild Wings Inc. rose $2.98, or 2 percent, to close at $107.19.

—The Cheesecake Factory Inc. rose 39 cents to close at $43.41.

— Cracker Barrel Old Country Store Inc. rose $1.69, or 1.7 percent, to close at $100.74

—Ruby Tuesday Inc. rose 9 cents, or 1.2 percent, to $7.41

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