Red Robin's Wings Clipped By Bank Of America Downgrade

Shares of Red Robin Gourmet Burgers, Inc. (NASDAQ: RRGB) traded down on Tuesday after Bank of America Merrill Lynch downgraded the stock from Buy to Underperform rating. Analyst Joseph Buckley has a target price of $50 on the company's stock.

The comments come in the wake of an earnings miss in the first quarter. Street analysts have reduced their EPS estimates from $0.56 90 days ago to $0.50 30 days back.

The brokerage sees Red Robin Gourmet facing sales challenges in the near term. As a result, the analyst sees risk to the earnings projections. Currently, Buckley expects the company to deliver an EPS of $0.42, which is $0.08 lower than the consensus estimates.

In a research note, the analyst said, "Low valuation is a risk to our call, but low margins leave the company exposed to sharp corrections if sales remain weak."

Related Link: Red Robin Gets Innovative With Latest Menu Changes

At time of writing, the stock had dropped 3.69 percent on the day and was seen trading at $47.03.

Full ratings data available on Benzinga Pro.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!