:max_bytes(150000):strip_icc()/GettyImages-2228107802-19c4610cb5d94ea18b005475e4688cbb.jpg "Morgan Stanley Likes These Restaurant Stocks. Here’s Why.")
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Key Takeaways
- Morgan Stanley noted restaurants’ second-quarter results and summer industry reports bode ill for some chains.
- The analysts noted that higher food costs impacted profits.
- Morgan Stanley analysts said they like fast-casual restaurants, including Wingstop and Chipotle Mexican Grill.
Morgan Stanley has put out a warning about some in the restaurant sector.
In a note to clients, the analysts explained that second-quarter earnings reports below estimates and weak industry data in the summer “suggest sentiment, policy actions, immigration, maybe shift to goods are impacting demand.”
Morgan Stanley pointed out that higher food costs, especially beef, affected profits.
The analysts said a bright spot was fast-casual restaurants, and they continue to like Wingstop (WING) and Chipotle Mexican Grill (CMG) into next year. They added that CAVA Group (CAVA) and Shake Shack (SHAK) “perhaps garner more attention post resets.”
Morgan Stanley also noted that McDonald’s (MCD) is reducing prices, and that’s putting the fast-food giant in a strong position in the “next phase of value wars,” and squeezing Burger King owner Restaurant Brands International (QSR).
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