Bloomin' Brands, Inc. (BLMN) shares rose more than 8% during Tuesday's session after Deutsche Bank and Raymond James upgraded the stock. The company owns and operates a number of restaurant chains, including Outback Steakhouse.

Key Takeaways

  • Bloomin' Brands shares moved sharply higher after Deutsche Bank and Raymond James upgraded the stock during Tuesday's session.
  • The company's second quarter financial results missed estimates on the top line, but strong margins helped boost the bottom line.
  • The stock broke out from the 200-day moving average to fresh highs but appears overbought from a technical standpoint.

Deutsche Bank upgraded the stock to Buy with a $20.00 price target, saying that shares have 40% upside potential over the next 12 to 18 months in a relatively conservative base case and more than that in a bull case that has a reasonable probability. The base case is based on average unit volumes and margins in 2022 roughly returning to 2019 levels.

Raymond James upgraded the stock from Outperform to Strong Buy with an $18.00 price target. Analyst Brian Vaccaro called the restaurant group an unwarranted laggard and added that trading multiples were very attractive at current levels.

Tip

A laggard is a stock or security that is underperforming relative to its benchmark or peers. A laggard will have lower-than-average returns compared to the market. A laggard is the opposite of a leader.

Last month, Bloomin' Brands reported second quarter revenue that fell 43.3% to $578.46 million, missing consensus estimates by $12.59 million, and a non-GAAP net loss of 74 cents per share, beating consensus estimates by 43 cents per share. Restaurant margins came in at 2.7% last quarter while the company reported more than $500 million in liquidity.

Chart showing the share price performance of Bloomin’ Brands, Inc. (BLMN)
TradingView.com

From a technical standpoint, the stock broke out from the 200-day moving average at $14.64 during Tuesday’s session. The relative strength index (RSI) moved further into overbought territory with a reading of 81.86, but the moving average convergence divergence (MACD) experienced a bullish crossover. These indicators suggest that the stock could see some near-term consolidation before resuming its move higher.

Traders should watch for consolidation above the 200-day moving average at $14.64 and below trendline resistance at around $17.50. If the stock breaks down from the 200-day moving average, traders could see a move toward trendline support at about $12.00. If the stock breaks out from trendline resistance, traders could see a move toward prior highs of $23.57.

The Bottom Line

Bloomin' Brands shares moved sharply higher after a pair of analyst upgrades following strong bottom-line performance during the second quarter. After breaking out from reaction highs, the stock appears overbought from a technical standpoint and could see consolidation from within its price channel over the coming sessions.

The author holds no position in the stock(s) mentioned except through passively managed index funds.