Restaurant Winners and Losers: Darden

Restaurant stocks mainly fell Thursday after a Raymond James analyst downgraded his rating on a number of sit-down restaurant stocks, saying they are now fairly valued.

Analyst Bryan C. Elliott said in a note to investors that a surge in the stock prices in the sector lately is mainly due to short-sellers rather than investors making long-term investment decisions.

Short-sellers bet against a stock. The practice, which is legal and widely used on Wall Street, involves borrowing a company's shares, selling them, and then buying them when the stock falls and returning them to the lender. The short-seller pockets the difference in price.

The short-selling has bumped up stock prices so that the stocks now appear to be fairly valued, Elliott said.

Elliott cut his rating on Olive Garden owner Darden Restaurants (DRI Quote), Chili's Grill & Bar operator Brinker International (EAT Quote), Cheesecake Factory (CAKE Quote), Cracker Barrel Old Country Store (CBRL Quote), Texas Roadhouse (TXRH Quote), Buffalo Wild Wings (BWLD Quote) and California Pizza Kitchen (CPKI Quote) to "Market Perform" from "Outperform."

He also lowered his rating for Chipotle Mexican Grill (CMG Quote) to "Underperform" from "Market Perform."

Elliott said he is still optimistic that sales at most operators will recover by the end of the year once more independent restaurants shut their doors. A number of restaurant chains -- battered by high levels of debt, slow sales and high food and labor costs -- have been forced to go out of business.

But, he said, it may take longer for some sit-down operators' earnings to grow given rising unemployment and more restricted credit.

Brinker shares fell 36 cents to $14.22 while shares of Cheesecake Factory dropped 68 cents, or 5.7%, to $11.35 in afternoon trading. Shares of Buffalo Wild Wings, however, rose 64 cents to $37.11.