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UPDATE: Wunderlich Securities Reiterates On The Cheesecake Factory Following Q2 Miss

Dwight Einhorn

In a report published Thursday, Wunderlich Securities analyst Robert M. Derrington reiterated a Hold rating on The Cheesecake Factory (NASDAQ: CAKE), but lowered the price target from $48.00 to $46.00.

In the report, Wunderlich Securities noted, “Cheesecake (CAKE) reported Q214 (Jun) EPS of $0.59 vs. guidance of $0.59-0.62 and our/Street $0.61. The slight EPS miss was dragged by weak revenue and margin deleverage, along with higher dairy and medical costs. Following those results and on its conference call last night, management reduced its 2014 EPS guidance to $2.19-2.25 from $2.24-2.33 and set Q314 EPS at $0.55-0.58 vs. our/Street prior $0.60. Accordingly, we have trimmed 2014 EPS to $2.20 from $2.28 (incl. Q314 by $0.04 to $0.56), and our 2015 EPS to $2.55 from $2.65 on more cautious expectations. Based on our lowered estimates, we have reduced our projected total return target for CAKE to $46 from $48 factoring a 8.0-8.2x EV/EBITDA multiple along with its 18% improved dividend (est. annual $0.66), and reiterate our Hold rating.”

The Cheesecake Factory closed on Wednesday at $43.96.

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