Shares of Cheesecake Factory Inc. dropped 6 percent Tuesday after an analyst cut his rating on the stock, saying sales at the upscale casual restaurant aren't likely to improve in the current quarter.
In a note to investors, Cowen and Co. analyst Paul Westra said the Calabasas Hills restaurant chain probably will trade in line with the overall market over the next six months. Westra said he expects sales in the casual dining sector as a whole will fall more than 5 percent in October alone.
Westra noted that consumers have been increasingly cutting back on eating out, opting for meals at home or heading to cheaper fast food restaurants instead.
Cheesecake, which reports third quarter earnings Thursday, reported a decline of about 4 percent in same store sales in the second quarter.
"Within the context of a worsening macroeconomic environment, we now choose to await for more concrete same-store sales and earnings visibility before recommending clients add new money into Cheesecake Factory shares," he said.
Cheesecake closed down 66 cents to $9.82 on the New York Stock Exchange.
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