We raise our 12-month target by $20 to $180 on P/E of 23.6x our FY 22 (May) estimate, slightly below peers. We raise FY 22 and FY 23 EPS estimates by $0.28 and $0.34 to $7.63 and $8.47. We think DRI's revised FY 22 financial targets underscore its notable strides on the road to recovery from the pandemic-related disruption. This follows its Aug-Q consolidated same-restaurant sales growth of nearly 48% that was well ahead of expectations and tracking above their pre-pandemic levels, with broad-based double-digit rebound across the business segments (Olive Garden, LongHorn Steakhouse, Fine Dining, and other). We see continued traction on digital (60% of Aug-Q off-premise sales). DRI now sees FY 22 same-restaurant sales growth of 27%-30% (vs. prior range of 25%-29%), driving total sales growth of 7%-9% (vs. 5%-8%) factoring in 2%-3% unit growth (on 35 to 40 new restaurant openings per year). But, we see lingering near-term pressures on wage inflation that is being exacerbated by an industrywide labor shortage.
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