Markets & Finance

Prudential Ups Darden Restaurants to 'Overweight'

Prudential upgraded Darden Restaurants (DRI) to overweight from neutral.

Analyst Larry Miller says he believes Red Lobster is showing signs of a profit recovery. He says better sales and traffic trends at Red Lobster could continue due to easy comps and better marketing. He expects continued strength at Olive Garden, supported by to-go ads in fiscal 2005 (May), 2.0% to 3.0% better pricing, and continued effective marketing. He says Red Lobster could have a new president by the end of May, as well as a new "old" marketing campaign that could help support sales. He says the stock is undervalued given the improvement at Red Lobster. He raised the $1.35 fiscal 2004 earnings per share estimate to $1.49, and upped the $1.51 fiscal 2005 earnings per share estimate to $1.63. He raised the $22 target to $27.

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