TALES OF THE TAPE: SONC, PNRA, SBUX, CAKE, DRI, PFCB, RT, EAT

Notable news items and price action from the restaurant space as well as our fundamental view on select names.

MACRO

Corn prices have been on a downward trend of late but Morgan Stanley is still advising clients to be long December 2011 corn.  The argument, per Bloomberg, is that inventories are tight and the government’s acreage number will ultimately be revised downward by the USDA.

TALES OF THE TAPE: SONC, PNRA, SBUX, CAKE, DRI, PFCB, RT, EAT - corn 78

QUICK SERVICE

  • SONC is rated Buy at Lazard Capital, with a PT of $13.
  • PNRA was reiterated overweight at Piper Jaffray, with an upwardly revised price target of $148.
  • SBUX has appointed Greater China Chairman Wang Jinlong as head of its Asia Pacific operations excluding China.
  • SBUX is testing “refreshers” in a can, according to starbucksmelody.com.

CASUAL DINING

  • CAKE rated New Neutral at Lazard Capital.
  • BJRI rated New Neutral at Lazard Capital.
  • DRI rated New Buy at Lazard Capital.
  • DRI’s Olive Garden has rolled out a more healthful kid’s menu, dropping milkshakes and fries in favor of fruit smoothies and grapes.
  • PFCB rated New Buy at Capstone.
  • RT rated New Hold at Capstone.
  • EAT’s Chili’s is in hot water again having serves three fruit smoothies with tequila to a trio of young children (as young as 8 years old).

TALES OF THE TAPE: SONC, PNRA, SBUX, CAKE, DRI, PFCB, RT, EAT - stocks 78

Howard Penney

Managing Director

Rory Green

Analyst