Morgan Stanley analysts upgraded Brinker International (NYSE:EAT) to Equalweight from Underweight and raised their price target significantly to $115, up from $70, reflecting increased confidence in the company’s operational and financial outlook. The move follows sustained positive momentum in key performance metrics and a successful turnaround at Chili’s, Brinker’s flagship brand.
The analysts acknowledged a shift in perspective, citing consistent data trends that have outperformed initial expectations. Brinker’s ability to drive double-digit comparable sales growth, while uncommon in the restaurant industry, has been a standout factor. Although such growth rates may not be sustainable long-term, the analysts now see reduced risks of a full reversion to weaker performance trends, thanks to the company’s strategic execution.
Chili’s transformation has been particularly impressive, with improvements in customer engagement, menu offerings, and operational efficiencies contributing to stronger financial results. The analysts noted that these gains could lead to structurally improved margins, a healthier balance sheet, and enhanced capital availability—addressing prior concerns about the company’s broader financial position.
While the stock price already reflects much of this optimism, the analysts believe the improvements are robust enough to support continued financial strength even as sales growth begins to normalize. However, they also cautioned that the stock remains sensitive to potential earnings misses or a slowdown in the current rate of improvement.