The Cheesecake Factory Incorporated (CAKE) could serve up a less than appetizing sales outlook for the year when the restaurant chain reports its second-quarter financial results on August 2, according to UBS analysts.
In a note to clients, the analysts pointed to potential consumer spending pressures and still elevated pricing in 2023 as being possible risks to traffic and revenue targets this year.
“While CAKE's improved margin outlook is likely intact, we remain concerned that macro challenges and potential industry demand pressures represent risks to outlook and shares, which are up 18% since June, even as elevated short interest represents an upside risk from better than expected results," the analysts wrote.
Analysts at UBS also cautioned that the Cheesecake Factory’s same-store sales and earnings could also fall short of investor expectations.
Nevertheless, they noted that over the longer term strong customer brand affinity, off-premise sales, and marketing opportunities will support outperformance of the company’s share price.
Near term, though, the analysts have a ‘Sell’ rating and a 12-month target price of US$30 per share on the stock.
Shares of Cheesecake Factory eased 1.8% to $36.11 in afternoon trading on Tuesday but have gained 12% in the year to date.
Contact Sean at sean@proactiveinvestors.com