12:20 PM EDT, 06/12/2024 (MT Newswires) -- Darden Restaurants ( DRI ) is expected to face "another tougher" quarter, with slower business trends likely to persist in the near term, Morgan Stanley said in a note Wednesday.

The restaurant operator is scheduled to report its fiscal Q4 results June 20. Morgan Stanley expects adjusted earnings of $2.62 per share, up from its prior outlook of $2.61 and in line with Wall Street's estimates, the brokerage said.

"While the sales trajectory we think remains a bit more challenging in [fiscal Q4] and [H1 of 2025], we do expect a ramp in 2H back to ~2%+ [same-store sales] on easing compares and normalization of behavior by income cohort," Morgan Stanley said.

The brokerage cut its fiscal 2025 EPS outlook to $9.43 from $9.58, with same-store sales growth forecast at 1.5%. The market is looking for $9.58 and 2%, respectively, according to the note.

Morgan Stanley lowered its price target on the Darden Restaurants ( DRI ) stock to $175 from $180 while maintaining its overweight rating.

"Comp acceleration may still take some time and more aggressive [Darden Restaurants ( DRI )] actions, but we think this is feasible and still have a positive view of stock longer term," the brokerage said.

Price: 147.85, Change: +1.24, Percent Change: +0.85