What Happened?
Shares of casual restaurant chain Dine Brands (NYSE: DIN) jumped 5.8% in the afternoon session after UBS raised its price target on the stock to $35 from $21, although the firm maintained its "Neutral" rating.
This significant increase in the price target suggested a more positive outlook for the company's value from the analyst. While the "Neutral" rating was unchanged, the action indicated increased confidence in the stock's potential. The positive sentiment was likely supported by the same analyst's actions elsewhere in the restaurant sector. On the same day, UBS also upgraded competitor Brinker International from "Neutral" to "Buy," which hinted at a more favorable view of the industry as a whole.
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What Is The Market Telling Us
Dine Brands’s shares are very volatile and have had 27 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 19 days ago when the stock gained 2.8% on the news that positive results from competitor Darden Restaurants lifted investor sentiment for the broader restaurant industry. Darden, which owns well-known chains, reported that its total sales increased 7.3% to $3.1 billion in its second quarter. The company's performance was better than expected, driven by a 4.3% increase in same-restaurant sales. The strong report from a major industry player suggested that consumer spending on dining out remained healthy, which likely improved the outlook for other companies in the sector, including Dine Brands.
Dine Brands is up 9.9% since the beginning of the year, and at $36.51 per share, has set a new 52-week high. Investors who bought $1,000 worth of Dine Brands’s shares 5 years ago would now be looking at an investment worth $553.61.
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