Chili's parent Brinker International can jump more than 30%, Evercore ISI says

Evercore ISI analyst David Palmer upgraded Brinker International (EAT) to Outperform from In Line, raising the price target to $210 and implying 32% upside, following the company's strong fourth-quarter revenue and optimistic fiscal year 2026 earnings guidance. The upgrade is predicated on Brinker's consistent performance at Chili's and anticipated sustainable same-store sales growth driven by ongoing operational improvements, strategic menu enhancements, effective marketing, and new unit expansion, which Palmer believes warrants a higher valuation. Shares reacted positively, rising over 2% on the news.

Analysis

Evercore ISI has upgraded Brinker International (EAT) to Outperform from In Line, raising its price target by $20 to $210 and signaling a potential 32% upside. This follows a strong fourth-quarter report where revenue surpassed Wall Street expectations and the company issued fiscal year 2026 earnings guidance slightly above consensus. The analyst's thesis is not based on a short-term event but rather on the potential for sustainable same-store sales (SSS) growth, viewing the company's operational improvements as being in their 'early to middle innings.' Key drivers for this sustained momentum include specific marketing and menu levers, such as the recent ribs relaunch and new skillet queso, alongside investments in labor to improve customer satisfaction. The upgrade also notes budding growth from new units and remodels. Despite the stock trading at a P/E valuation that is '3 turns more expensive,' the analyst argues that Brinker is transitioning to a sustainable growth profile that warrants a higher, 'Darden-like' valuation, a sentiment that has already been partially echoed by recent price target increases from Piper Sandler and Morgan Stanley.

Key Decisions for Investors

• Investors could view the stock as a compelling growth opportunity, as the core thesis suggests the operational turnaround is in its early stages with a lengthy runway, rather than being fully priced in despite the 20.2% year-to-date gain.
• Monitor same-store sales growth, customer satisfaction data, and the performance of new menu items in upcoming quarters, as these are the primary catalysts that must materialize to justify the thesis of a valuation re-rating toward its peers.
• Given the valuation is already expanding, investors should assess whether the execution of the company's menu, marketing, and remodel strategies can deliver the growth necessary to support a premium multiple relative to its historical average.