Stifel Sees Fair Value Of Del Frisco's Shares At $14

Stifel lowered its rating on Del Frisco's Restaurant Group, Inc. DFRG and trimmed its fair value estimate for shares of the company.

Stifel analyst Paul Westra's muted outlook for the monolithic restaurant group is based on his view that the U.S. economy will slip into a recession in the next 3-9 month timeframe. The analyst also models a below-consensus, industry-wide comp outlook of 0.5 percent for the two years from the second half of 2016 into the first half of 2018.

The Bearish outlook for the industry as a whole is premised on a slowing sales trend, given the second quarter deceleration in comps across industries, the margin degradation anticipated and valuations that have trailed the broader market.

Accordingly, Stifel lowered Del Frisco's comps for the third and fourth quarters of 2016 and 2017 and its EPS estimate citing worsening macroeconomic conditions and the competitive backdrop. The firm now estimates comps of 0.4 percent for 3Q, 0.8 percent for 4Q and 1 percent for 2017 and earnings per share of 5 cents for 3Q, 35 cents for 4Q and 88 cents for 2017.

Specifically, the firm lowered its rating on the shares of the company to Hold from Buy and its fair value estimate to $14 from $23.