Shares in local casual dining companies took another hit Wednesday after a Bear Stearns analyst said shares in the maligned sector will likely continue to drop in 2008.

Analyst Joseph Buckley cut his rating on the entire sector saying that the “valuations are not as low as current expectations imply.” The downgrade comes as many of the stocks already are trading near their lows in more than a year.

Shares in Calabasas-based Cheesecake Factory Inc. shed the most Wednesday, losing 7.1 percent to $22.03. Reports have surfaced in recent weeks that investors are unhappy with the way the company’s chief executive and founder, David Overton, is running the company.

Shares in Los Angeles-based California Pizza Kitchen Inc. dipped 5.8 percent to $14.68, shares in Glendale-based Ihop Corp. shed 4.3 percent to $34.99, and shares of Los Angeles-based Grill Concepts Inc. lost 1.1 percent to $4.11.

The casual dining sector was hit hard in the second half of 2007 by higher costs for food and labor as well as a slowdown in consumer spending due to high gasoline prices and the weak housing market.

Buckley continued by saying he expects “the early part of the new year to be an extension of the fundamental weakness that dominated the casual dining sector in the second half of 2007.”