Cheesecake Factory Shares Upgraded to Buy After `Exaggerated Selloff'

Cheesecake Factory shares were upgraded to buy at Gordon Haskett, which wrote that the selloff in the restaurant chain's shares was "exaggerated."
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Shares of Cheesecake Factory  (CAKE) - Get Report rose after research firm Gordon Haskett upgraded its rating on the restaurant company to buy from hold.

The firm’s analysts noted in a commentary that the Calabasas Hills, Calif., chain already has reported its coronavirus-inflicted woes, and they view investors' reaction to the stock as an “exaggerated selloff,” CNBC reports. 

The shares have dropped 51% over the past month.

Cheesecake Factory last week said in a regulatory filing that it furloughed 41,000 hourly workers. It employed 46,250 workers at the end of last year.

Meanwhile, “we are not planning to pay rent on our leases for the month of April 2020 at this time,” the company said in the filing.

“We are in various stages of discussions with our landlords regarding ongoing rent obligations, including the potential deferral, abatement and/or restructuring of rent otherwise payable during the period of the Covid-19 related closure."

The coronavirus has forced restaurants to close their dining rooms around the country, making them rely on takeout and deliveries.

Cheesecake Factory said in a statement last week that it actually does relatively well with that model. Its off-premise sales historically “approach the size of many stand-alone restaurants, which is enabling the company’s restaurants to operate sustainably at present under this model,” the statement said.

Most of the company’s 294 restaurants are open for takeout, while 27 are closed.

Cheesecake said in the statement that it has drawn an additional $90 million on its revolving credit facility to increase its cash position.

At last check, Cheesecake shares traded at $17.21, up 4.3%.