Analysts Bet on Chili’s Momentum, Despite Maggiano’s Drag

Forward-Looking Analysis

Analysts have upgraded Brinker International (EAT) to "Overweight" or "Outperform" ratings from Morgan Stanley, Raymond James, and Wells Fargo, with price targets raised to $200 (Wells Fargo) and $186 (BofA). These upgrades highlight Chili’s strong sales growth, digital initiatives, and menu innovation as key drivers. However, risks include Maggiano’s underperformance and cost pressures, which could compress margins. Earnings expectations for Q2 2026 are anchored by Q1 results showing $2.23 EPS and $1.35B revenue. Analysts are monitoring same-store sales, labor/commodity costs, and FY26 guidance for confirmation of sustained momentum.

Historical Performance Review

Brinker International reported Q1 2026 revenue of $1.35 billion, net income of $99.50 million, and EPS of $2.23, reflecting robust performance. Gross profit stood at $229.60 million, underscoring operational efficiency. These results outperformed expectations, driven by Chili’s traffic gains and pricing discipline, positioning the company for continued growth in Q2.

Additional News

Recent analyst activity includes TD Cowen initiating coverage with a "Buy" rating and UBS upgrading EAT to "Buy." Institutional investors have increased holdings, while short interest decreased by 7.71%, signaling improved sentiment. Chili’s partnership with Spire Motorsports and NASCAR, along with digital menu innovations, has bolstered brand visibility. However, Q2 previews caution that Maggiano’s softness and input costs remain near-term headwinds. Analysts emphasize monitoring Chili’s mix and margin trends to validate upside potential.

Summary & Outlook

Brinker International’s Q1 results and analyst upgrades reflect strong operational execution and brand resilience. With Chili’s driving traffic and digital adoption, the company is well-positioned for Q2 growth. While Maggiano’s challenges and cost pressures pose risks, the consensus price target of $184.72 (13.6% upside) suggests bullish sentiment. Sustained same-store sales growth and margin expansion could validate the upgraded outlook, making EAT a compelling play in the casual dining sector despite macroeconomic uncertainties.