Editor's Note: Please note that Hedgeye Restaurants analyst Howard Penney will send out a full report outlining our high-conviction short thesis later this week. In the meantime, below is a brief update sent today by Hedgeye CEO Keith McCullough in Real-Time Alerts:
"I'm looking for the "consumer is in good shape" narratives to short...
And Howard Penney (of Chipotle short selling fame) is telling me to look no further than the never ending bowl of storytelling pasta.
Darden is up on a rope relative to where it was when Penney went bullish on it a few years ago... and he reminded our Institutional Research subscribers why it could go back to where it was on a conference call on February 2nd, 2016.
His new target price range is in the low $40’s
Insiders might agree. Per Penney, "recently DRI’s largest shareholder announced it was selling more stock. DRI’s core brand, Olive Garden is in need of a massive infusion of capital to fix the secular decline in traffic.
Knowing this investment will slow earnings growth and depress the multiple; we don’t want to own the stock either!"
Short Green,
KM"
