Analysts have upgraded Chipotle and downgraded Starbucks, with experts concerned that cost inflation will take a toll on the entire restaurant category.
The new year is just getting started but analysts have already upgraded Chipotle Mexican Grill Inc. and downgraded Starbucks Corp., with experts concerned that cost inflation will take a toll on the entire restaurant category.
“This buoys our restaurant margin expansion forecasts over the next two years, despite the industry’s inflation headwinds,” Oppenheimer said.“As we turn to 2022 and 2023, our deep-dive analysis suggests the financial model now lacks the levers for a ‘beat and raise’ thesis,” Oppenheimer said. “[T]he ongoing investment in its employees is core to Starbucks’ operating strategy and principles, and likely the right decision for the business over the long-term,” analysts led by Christopher Carril wrote.
“However, given ongoing cost inflation concerns, in the very near-term we prefer stocks of highly-franchised restaurant companies, over company-owned models.” Chipotle, Darden and McDonald’s are the top picks for UBS analysts as well. Analysts there upgraded Texas Roadhouse Inc. TXRH, -2.49% to buy from neutral.
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