Raymond James adjusted its restaurant sector ratings, upgrading Brinker International to Outperform while downgrading Cheesecake Factory and Darden Restaurants to Market Perform. Analyst Brian Vaccaro cited year-to-date stock outperformance and improving 2026 demand expectations as the rationale for the shuffle.

The firm attributed the sector's strength to a January comp rebound and heavy short covering. Brinker's $195 price target reflects potential for a 'beat and raise' quarter, supported by Chili's menu innovation and margin progress. Conversely, Cheesecake Factory and Darden were deemed fairly valued after reaching price targets, with Darden trading near a 20x P/E.

Raymond James also highlighted First Watch as a top long idea for 2026, citing strong comp momentum and unit growth. While fourth-quarter sales softened, the firm expects demand to firm in 2026 due to improving tax refunds and a stable jobs market.