Texas Roadhouse is a winner restaurant traffic proves durable and elevated beef prices are poised to come down, according to the RBC Capital Markets. The bank upgraded the restaurant chain to outperform from sector perform. It also raised its price target on shares to $210 from $180, implying nearly 19% upside from Thursday’s close. “Our thesis is based on two key points: 1) Increasing potential for beef prices to be less unfavorable driving upside to investor out year margin expectations…2) Durable traffic growth with potential for upside driven by share gains from both retail and steakhouse competitors,” analyst Logan Reich said in a note to clients. Texas Roadhouse has some of the most durable traffic growth of the companies covered by RBC, according to the analyst. The company could also see elevated beef prices become less of a drag on its margins. That’s because U.S. policy and supply shifts could increase the meat’s availability, driving down prices. RBC’s call goes against consensus on Wall Street. Of the 31 analysts covering Texas Roadhouse, 18 have a hold rating on the stock, while just 13 have a buy or strong buy on it, LSEG data shows. Shares have fallen nearly 7% over the past 12 months.
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