S&P REITERATES SELL RECOMMENDATION ON SHARES OF DARDEN RESTAURANTS
(Standard & Poor's)
On further review of management comments following August quarterly results, we are lowering our FY 10 (May) and FY 11 outlooks. We think DRI's decision to modestly increase menu pricing during the Aug-Q negatively affected traffic. With the decline in traffic more than offsetting the menu price hike, we lower our FY 10 revenue forecast by 3% to just above $7.00B, from $7.22B. Despite greater than anticipated commodity cost declines, we reduce our EPS estimate by $0.10 to $2.65. For FY 11, we lower our EPS estimate by $0.20 to $2.75. We keep our DCF-based $30 target price.