How Will Bloomin' Brands (BLMN) Stock Respond To This Analyst Price Target Reduction?

NEW YORK (TheStreet) -- Bloomin' Brands (BLMN) price target was lowered to $20 from $27 but remains a "buy" at Deutsche Bank (DB), following the casual dining company's guidance reduction.

Deutsche Bank called yesterday's sell-off an overreaction as the company's shares plunged to a 52-week low. 

Bloomin' Brands cut earnings per share for 2014 to a range of $1.05-$1.10 from $1.21, citing lower dinner traffic and and an increasingly competitive environment.

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The firm believes risk over reward is skewed to the upside.

Shares of Bloomin' Brands are up 2.26% to $15.4.

Separately, TheStreet Ratings team rates BLOOMIN' BRANDS INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate BLOOMIN' BRANDS INC (BLMN) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 5.9%. Since the same quarter one year prior, revenues slightly increased by 6.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, BLOOMIN' BRANDS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Hotels, Restaurants & Leisure industry average. The net income has decreased by 15.0% when compared to the same quarter one year ago, dropping from $63.22 million to $53.73 million.
  • The debt-to-equity ratio is very high at 2.68 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.

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