2023-06-14 09:55:42 ET
Recent channel checks from Wedbush suggest slowing sales at both Applebee’s and IHOP, prompting the firm to step to the sidelines on Dine Brands ( NYSE: DIN ).
Equity analyst Brian Mullan indicated that disappointing channel checks suggest same store sales are likely to miss estimates at multiple chains owned by the brand. Additionally, a “dearth of medium-term positive catalysts beyond Q2” and the lessened likelihood of shareholder return actions motivate his dampened view of the stock.
“Given DIN's current valuation, we previously expected a large proportion of free cash flow post the recent refinancing to be directed towards repurchases,” he told clients. “However, we now believe management is prioritizing rebuilding cash on the balance sheet in the near- to medium-term.”
As such, Mullan moved to Neutral from a prior Outperform rating. He also lowered his price target to $65 from a prior $80. Shares of Dine Brands ( DIN ) dipped about 2% shortly after Wednesday’s market open.
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Dine Brands cut to Hold as Wedbush sees slowing Q2 sales