Goldman Upgrades Panera Bread To Buy, Lowers Bloomin' Brands To Neutral

By Ciara Linnane Markets MarketWatch Pulse

Goldman Sachs analysts upgraded Panera Bread Co. stock to buy from neutral Thursday, and said it expects the fast-casual restaurant chain's Panera Delivery vertical will help drive growth. "Search trends for "Panera delivery" steadily improved throughout 2016, as the platform expanded to new markets," they wrote in a note to investors. "Yelp reviews also show some improvement in newer markets and an analysis of reviews over time suggests positive momentum." The bank downgraded Bloomin' Brands Inc. to neutral from buy, citing margin pressure and the risk of higher interest rates. Shares have fallen 20% since Goldman initiated coverage with a buy rating in July of 2015. "Although steak likely drives a favorable commodity outlook for 2017 given still very favorable cattle markets, we see risk to the top-line, downside on labor costs, and additional estimate pressure from rising rates," said the note. Panera shares were up 0.8%, while Bloomin' Brands were down 0.3%. The S&P 500 was down 0.2%.

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