Fast-casual restaurant chain Cheesecake Factory (NASDAQ:CAKE) notched up over 1% in premarket trading today after an upgrade from analysts, among other factors. That upward momentum has continued into this morning's trading session. While the Cheesecake Factory had been seen in decline previously, losing about 8% over the last month, it's seen some recent gains that suggest a comeback afoot. Financial analysts, meanwhile, are suggesting caution, but less strenuously than they were a year ago.
CAKE Stock is An Increasingly Tastier Proposition
The latest word came in from Raymond James, by way of analyst Brian Vaccaro and his team. Raymond James upgraded Cheesecake Factory stock from “market perform” to “outperform”, suggesting that the market is underestimating the impact of an economic reopening on full-service restaurants. Vaccaro and team offered a similar upgrade to Brinker International (NYSE:EAT), for similar reasons under similar conditions.
As for Cheesecake Factory, Vaccaro noted that many full-service restaurant stocks were “...worth a fresh look” following the pullback in the sector seen throughout the second quarter. While many investors were concerned about the overall trajectory of the sector, what's been seen so far suggests these concerns may ultimately prove unfounded. Cheesecake Factory in particular, Vaccaro noted, is making particular gains thanks to a weighted exposure to California, which has only recently fully reopened.
Additionally, Cheesecake Factory is also planning the rollout of new products, which should have a similar effect chain-wide. The company plans to release a coconut cream pie cheesecake, and plans to release it to coincide with National Cheesecake Day on July 30. The cheesecake is poised to feature vanilla custard and chocolate on a crust made from coconut macaroons, and those buying in on July 30—or any other variety for that matter—will be helping a good cause. Cheesecake Factory is poised to make a $1 donation to Feeding America for each piece of cheesecake sold on National Cheesecake Day.
A recent Zacks report also pointed out several measures giving Cheesecake Factory upward momentum, including a recent focus on an off-premise business model. Off-premise operations, reports noted, contributed around 43% to total sales for the company during the first quarter of the fiscal 2021 year. Cheesecake Factory has also been visibly improving its mobile payment app, CakePay, as well as seeing growth from its delivery operations, both vital should there be a resurgence of government-imposed lockdowns following the resurgence of Covid-19 or its variants.
What Are Financial Analysts Saying About CAKE Stock?
The combination of improving rankings and growing—and well-timed—menu options is likely attractive to investors, but financial analysts, based on our latest research, are urging caution before buying in. The company currently carries a consensus rating of “hold”, which it's held for the last two years running.
A year ago, CAKE stock had six “buy” ratings to its credit, along with 12 “hold” and three “sell.” Six months ago, that shifted slightly bullish to six “buy”, 11 “hold” and three sell. Today, however, it's significantly different as we're at six “buy”, eight “hold” and two “sell.” Sell and hold side pressures are departing the picture, while buyers are remaining fairly static, suggesting a slightly more bullish pattern overall.
Price targets have a surprising range to them too. The average is currently $54.83, with a high of $70 and a low of $25 comprising the range. With Cheesecake Factory stock closing at $51.66 on Friday, there's still some upside potential to be had here as the company closes in on the consensus figure.
Recent action for Cheesecake Factory stock has been largely positive. The latest news from Raymond James is a big step, though before that, Stephens lowered its price target on the company from $60 to $55 back in June. April 2021, however, was huge for Cheesecake Factory, as seven analysts all increased price targets during that time. Both Wells Fargo and Wedbush raised their targets to that high of $70 in that time frame.
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