Restaurant Prospects Trending Down

March 09 2005 - 5:52 PM

From CHICAGO (MarketWatch) — Restaurants stocks took a tumble Wednesday after Lehman Brothers slapped a “neutral” rating on the segment, contending that the “days of rapid unit growth” are long gone.

Though he believes that the industry “remains healthy,” analyst Jeffrey Bernstein said “the recent strength in the sector is somewhat overdone.”

That, combined with lackluster sales results out of McDonald’s Corp. and Wendy’s International Corp., was like a weight on the sector, pulling nearly every major restaurant stock into the red.

“While we believe the restaurant industry is fundamentally healthy, there are several broader trends that pose long-term risks to continued sales acceleration,” Bernstein wrote in a research report, marking Lehman’s return to covering the group.

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