Brinker International (EAT), which operates well-known restaurant chains, recently experienced a decrease in its stock price. Over the past week, the company’s stock fell nearly 17%, according to data from S&P Global Market Intelligence, primarily due to an earnings report that did not meet market expectations. This decline was further influenced by several analysts reducing their price targets.
Market Challenges
In the fiscal third quarter of 2025, Brinker, owner of Chili’s and Maggiano’s Little Italy, reported revenue just below $1.43 billion. This represented a substantial 27% year-over-year increase, surpassing the average analyst estimate of $1.37 billion.
Similarly, Brinker’s net income, calculated according to GAAP, more than doubled over the year, reaching $119 million. Adjusted per-share profitability rose to $2.66 from $1.24, exceeding the consensus estimate of $2.49. Despite these strong numbers, investor concerns remain, particularly regarding the impact of the ongoing trade war on the U.S. economy. Nonessential spending, such as dining out, is often the first to be reduced when households tighten budgets.
Analysts’ Reactions
Consequently, some analysts are now less optimistic about Brinker’s future. Analysts from Wells Fargo and Barclays both lowered their price targets for the company. John Parke of Wells Fargo adjusted his target to $150 per share from $165, while Jeffrey Bernstein of Barclays reduced his to $155 from $165. Both analysts maintained hold recommendations for the shares.
Despite this cautious outlook, the company has demonstrated its ability to achieve significant growth, a challenging feat in the restaurant industry. This suggests that Brinker is well-positioned to navigate economic downturns effectively.
