TXRH - Restaurant stocks recommended by Wells Fargo after soft earnings from Brinker sends dine-in names tumbling

Wells Fargo calls the Brinker International (NYSE:EAT) earnings report a possible "clearing event" for the restaurant sector with share prices of dine-in restaurants stocks sharply lower in premarket action. Analyst Jon Tower says Q3 may be peak negative news for the restaurant space from a cost perspective. "Within casual dining, we continue to recommend names where an attractive valuation is married with (a) an underlying business that was altered during the pandemic to better address a new service (higher labor inflation) and demand (sustainable off- premise growth) reality or (b) have under-appreciated growth levers that should allow the company to grow top & bottom-lines in the face of ongoing inflationary pressures." Tower cites Darden Restaurants (NYSE:DRI) is cited as an example for the first factor and Cheesecake Factory (NASDAQ:CAKE) is called out for the second. Shares of EAT are down 12.77% premarket. Cheesecake Factory (CAKE) is off 4.27%. and Dine Brands (NYSE:DIN)

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Restaurant stocks recommended by Wells Fargo after soft earnings from Brinker sends dine-in names tumbling