Darden Restaurants Inc. (DRI) shares rose 6.3% in Wednesday premarket trading after the Olive Garden parent was upgraded to outperform from neutral at Wedbush based on its $1 billion in cash on hand. Wedbush raised its price target to $94 from $37. Darden said on Tuesday that it drew down $750 million from its revolving credit, which it had not touched, and had a new $270 million term loan agreement. The cash burn rate is $25 million per week. Its to-go business at both Olive Garden and Longhorn Steakhouse has grown for the quarter to date. For the week ending April 5, Olive Garden generated $39.1 million in sales and Longhorn Steakhouse tallied $19.9 million. Overall, Wedbush said casual chains, including Texas Roadhouse Inc. and Chuy's Holdings Inc. (CHUY), are well-positioned for the pandemic and the recovery. "Based on the cash burn we model through Q3 for each of our casual diners, we believe each has now secured ample liquidity," analysts said. Darden stock has slumped 50.6% over the past year while the S&P 500 index is down 8.2% for the period.
-Tonya Garcia; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
April 08, 2020 08:54 ET (12:54 GMT)
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