Jefferies Upgrades Brinker to Buy, Says Chili's Upside Is Underappreciated

Chili's has been one of the better turnaround stories in restaurants, and Jefferies thinks the market still isn't giving it full credit. CNBC reported Wednesday that the firm upgraded Brinker International (EAT) to Buy from Hold.

Jefferies also lifted its price target to $255 from $230. That implies about 26% upside from Tuesday's close, which works out to a share price around $202.

The call arrives with the stock already running hard. Brinker is up 41% in 2026 and is on pace for a fourth straight year of gains, which makes this an upgrade into strength rather than a bottom-fishing call.

Analyst Alexander Slagle's argument is that the story has changed. In his view, Brinker has moved past the "fix the problem" stage and into a business that can compound for years.

The turnaround itself is well documented. Chili's rebuilt its sales by getting loud on social media, refreshing menu items and leaning into value-focused advertising that pulled diners back in.

The numbers back that up. In the quarter ended Dec. 24, Chili's same-store sales rose 8.6%, marking its 19th straight quarter of growth, according to Nation's Restaurant News.

Same-store sales measure revenue at restaurants open at least a year, so they strip out the effect of new openings. Nearly five years of that kind of momentum is rare in casual dining.

"We see a clear transition from turnaround into a durable, compounding story." — Alexander Slagle, Analyst, Jefferies

What makes Jefferies bullish is the economics behind the growth. Slagle says the higher-volume, higher-margin model creates a flywheel: stronger sales fund reinvestment, which drives share gains and more sales.

There's still runway, too. Jefferies notes that Chili's has roughly 40% of its menu left to refresh, which gives management more room to pull in new customers and keep existing ones coming back.

For a stock-specific read, think of EAT as a growth story that happens to sell ribs and fajitas. The thesis rests on one brand executing well and a business model that turns traffic into profit efficiently.

Wall Street was already friendly. LSEG data shows that 20 of the 23 analysts covering Brinker rate it a buy or strong buy, with just three on hold. Jefferies is joining the crowd, not leading it.

Here's a detail worth noting. According to MarketScreener's summary of the upgrade, FactSet puts the average analyst price target at $268.86, above Jefferies' own $255.

In other words, Jefferies isn't even the most optimistic voice. It also means the Street already expects a lot, and the stock has to keep delivering to justify those targets.

That's the main risk. After a 41% run, expectations are high, and restaurants live and die by traffic. A softer consumer, a stumble in same-store sales or a margin squeeze from food and labor costs could hit the shares quickly.

Valuation matters here too. When a stock has been a winner for several years, even a good quarter can disappoint if it isn't good enough. Investors who buy now are paying for the success that's already visible.

So what's the practical move? If you own Brinker, the upgrade supports staying put while the turnaround keeps working. If you don't, chasing a freshly upgraded stock after a big run is rarely the best entry.

A pullback toward more reasonable levels, or a clear beat in the next earnings report, would be a more comfortable moment to build a position. Patience costs little with a story this durable.

Keep tabs on Chili's same-store sales growth, margin trends and progress on the menu refresh. Those are the three markers that tell you whether the flywheel is still spinning.

The bottom line: Jefferies says Chili's is no longer a turnaround, it's a compounder. The thesis is solid, but the price already reflects much of the good news.