What Happened?
Shares of restaurant company Bloomin’ Brands (NASDAQ: BLMN) jumped 3.7% in the afternoon session after Freedom Capital Markets initiated coverage on the company with a Buy rating and a $10.00 price target.
The price target suggested a potential 43% upside from the stock's price at the time of the report. The research firm believed Bloomin' Brands was in the early stages of a turnaround led by its Outback Steakhouse brand. This optimism was based on new leadership and several sales initiatives. These plans included improvements to steak quality, enhancements to the service model, and restaurant remodels, all aimed at driving growth.
After the initial pop the shares cooled down to $7.02, up 3.1% from previous close.
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What Is The Market Telling Us
Bloomin' Brands’s shares are extremely volatile and have had 48 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 4 months ago when the stock dropped 27.6% on the news that the company reported declining profit margins and slashed its full-year earnings forecast, citing rising costs.
While second-quarter revenue held steady at $1 billion, profitability eroded due to higher expenses for labor, commodities, and operations. The company's restaurant-level operating margin tightened to 12.0% from 14.0% a year earlier, a key metric that investors watched closely. The outlook particularly worried investors. Bloomin' Brands lowered its full-year earnings per share guidance to a range of $1.00 to $1.10, down from a prior outlook of $1.20 to $1.40. Furthermore, the company projected a loss for the upcoming third quarter, a sharp contrast to analyst expectations for a profit.
Bloomin' Brands is down 41.3% since the beginning of the year, and at $7.02 per share, it is trading 45.5% below its 52-week high of $12.89 from January 2025. Investors who bought $1,000 worth of Bloomin' Brands’s shares 5 years ago would now be looking at an investment worth $374.80.
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