Bloomin’ Brands Tops 3Q Results As Restaurant Sales Improve

Bloomin’ Brands reported better-than-expected 3Q results mainly driven by robust off-premise sales and an improving in-restaurant sales trend. Despite the stronger-than-expected quarterly performance, shares of the restaurant chain operator dropped 8.3% to $16.26 on Friday. It looks like investors are taking profits after the stock more than tripled from its low in mid-March.

Bloomin’ Brands (BLMN) reported 3Q revenues of $771 million that surpassed analysts’ expectations of $752 million. For the quarter, the company reported an adjusted loss per share of $0.12, which was much smaller than the Street consensus for a loss of $0.32.

Bloomin’ Brands noted that “Across the U.S. portfolio, we experienced consistent weekly sales momentum throughout the third quarter as we adapted to this evolving environment. In-restaurant sales continue to improve and our off-premises business remains robust as we are retaining approximately 50% of the incremental volume achieved while our dining rooms were closed.” (See BLMN stock analysis on TipRanks).

On Oct. 20, J.P. Morgan analyst John Ivankoe raised the stock’s price target to $20 (23% upside potential) from $16 and reiterated a Buy rating. In a note to investors, Ivankoe said that the quick-service restaurant industry’s all-store sales are continuously improving from 3% in July to 3.7% in August and further to 5.8% in September.

Currently, the Street is cautiously optimistic on the stock. The Moderate Buy analyst consensus is based on 5 Buys and 2 Holds. With shares down over 26% year-to-date, the average price target of $18.43 implies upside potential of about 13.4% to current levels.

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