Several US-based restaurant chains were down in pre-market trading after Stifel, Nicolaus & Co cut its forecasts for the sector.
Chipotle Mexican Grill, Inc. (NYSE:CMG), Cheesecake Factory Inc (NASDAQ:CAKE), Panera Bread Co (NASDAQ:PNRA) and a handful of others all had their ratings cut to ‘sell’, while others, including Texas Roadhouse Inc (NASDAQ:TXRH), were also downgraded.
In a research note today, Stifel managing director and senior analyst Paul Westra said he expects the US economy to enter a recession within the next three to nine months.
He added that the weak second-quarter sales across the dining sector could signal the start of a lengthy slowdown for the industry.
Westra said that the deceleration of the restaurant industry sales is a “harbinger” to a country-wide recession in 2017, as restaurants “have historically led the market lower during pre-recessionary periods.”
Elsewhere, mass media and entertainment giants The Walt Disney Company (NYSE:DIS) and Time Warner Inc (NYSE:TWX) have both been downgraded to ‘market perform’ from ‘outperform’ at FBR & Co ahead of their results over the next week or so.
It was more positive news for Nordstrom, Inc. (NYSE:JWN) as Piper Jaffray moved the fashion retailer up to an ‘overweight’ rating from ‘neutral’, while also raising its stock price target to US$53 from US$45.
The investment bank added that it expects Nordstrom to bounce back from the “doldrums” experienced in the spring, while it also optimistic that the company’s current anniversary sale will beef up sales figures.
Similarly, infant formula manufacturer Mead Johnson Nutrition CO (NYSE:MJN) was upgraded to ‘overweight’ from ‘neutral’ by JP Morgan, with the bank also raising its price target for the stock to US$105 from US$85.