01:39 PM EST, 12/17/2024 (MT Newswires) -- Darden Restaurants' ( DRI ) fiscal second-quarter earnings could fall short of Wall Street's estimates, while the company is unlikely to change its full-year bottom-line outlook, Morgan Stanley said in a note e-mailed Tuesday.

The parent company of Olive Garden ( DRI ) and LongHorn Steakhouse is scheduled to report second-quarter results Thursday. Morgan Stanley reduced its earnings expectations to $2.01 a share from $2.06 previously, lagging the Street's $2.02 view, the brokerage said.

Casual dining saw a "solid" same-store sales recovery last month after falling in October, Morgan Stanley said, citing Black Box data. However, Darden appears to have picked up less than its competitors, the brokerage wrote, citing Second Measure data.

Olive Garden ( DRI ) began the quarter strong amid robust promotion of the Never Ending Pasta Bowl offer, though October and early November were weaker until the Thanksgiving lap ending the three-month period, Morgan Stanley said, citing weekly Second Measure and Placer.ai data. The brokerage lowered its second-quarter Olive Garden ( DRI ) growth outlook to around 1.3% -- which it said was similar to the Street -- from 1.8%.

Darden shares were down 1.4% in Tuesday afternoon trade.

At LongHorn, brand-level traffic and sales trends continued to be "relatively stable," with modest improvement through the quarter from the previous three-month period, the firm said. It expects LongHorn's second-quarter same-store sales to grow 4.6%, compared with the Street's outlook of a 4.2% rise.

Morgan Stanley cut its full-year EPS projection to $9.41 from $9.45 versus the Street's $9.43 view and the company's own guidance range of $9.40 to $9.60.

The brokerage maintained its overweight rating on the Darden stock and increased its price target to $193 from $188. The firm expects the company's recent acquisition of Tex-Mex restaurant chain Chuy's to be "slightly accretive" to fiscal 2026 and not to 2025.

Darden's valuation and some potential Olive Garden ( DRI ) catalysts such as its delivery partnership with Uber ( UBER ) can support the stock "somewhat even if current trends, and bottom-line performance, are not as impressive," Morgan Stanley said.

Price: 164.97, Change: -2.60, Percent Change: -1.55