BLMN - Bloomin' Brands downgraded as BMO eyes margin risk

A double-digit gain from late December for Bloomin’ Brands ( NASDAQ: BLMN ) prompted BMO to pump the brakes on the stock on Wednesday.

Equity analyst Andrew Strelzik told clients that his cautious outlook for consumer spending, especially in full service restaurants, remains unchanged even amid strong traffic to start 2023. Additionally, he believes margins are likely to remain under pressure as beef prices rebound.

“We are using recent strength in BLMN shares, which coincided with accelerating BLMN/industry traffic data, as an opportunity to move to the sidelines as risk/reward has become more balanced,” he wrote. “We believe it is prudent to be opportunistic given traffic improvements likely are unsustainable, we remain concerned about broader consumer outlook, and there is some risk to 2023 consensus margins.”

Strelzik cut his rating on the stock to Market Perform from a prior Outperform and reduced his price target to $26 from $29 while lowering EPS and margin forecasts. Shares slipped 2.18% in premarket trading on Wednesday.

Read more on why Raymond James is conversely bullish .

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