Morgan Stanley’s data-driven evaluation of the restaurant house to start out 2023 included just a few excessive profile ranking adjustments.

In assuming protection of restaurant shares from John Glass, fairness analyst Brian Harbour adjusted rankings throughout the trade amid what he expects to be a harder 2023. These shifts included an improve of Domino’s Pizza (NYSE:DPZ) and Portillo’s (PTLO) to Overweight from Equal Weight and a downgrade of Chipotle Mexican Grill (NYSE:CMG) to Equal Weight from Overweight.

Harbour famous {that a} slowdown in visits is anticipated, with customers growing concentrate on worth.

“Across segments, more consumers are paying attention to price though, making value proposition increasingly important,” he suggested shoppers on Tuesday. “Consumers expect to visit casual dining restaurants on average 4% less in the next six months vs. just a 1% decline for quick-service, aligning with our expectations for customers to turn to more value-oriented options.”

Harbour added that quick informal, pizza, and low eating places are displaying constructive intentions. He attributes this to each robust worth notion for manufacturers like Domino’s (DPZ) and Portillo’s (PTLO) in addition to a commerce down from full service eating places as customers tighten belts.

In distinction, Chipotle (CMG) was close to the underside of worth notion surveys, including to considerations on foot-traffic traits.

“In the near to medium term though, we think it will be harder for the stock to outperform, as we think the concerns about traffic and pricing have merit and will be harder to disprove for several quarters with some further price sensitivity possible, and our top line estimates are below consensus reflecting this,” Harbour suggested shoppers. “Softness spreading to higher end customers and the food delivery channel could be a challenge across fast casual, and might be for CMG as well.”

He decreased his worth goal on the inventory to $1,664 from a previous $1,847 alongside the downgrade and elimination of prime decide standing.

Yum! Brands (YUM) was as an alternative named a prime decide for 2023. A rebound in China and energy at Taco Bell had been each famous as key components undergirding bullishness on the identify. It additionally ranks at the highest of the financial institution’s defensive restaurant picks alongside McDonald’s Corporation (MCD). Yum! Brands (YUM) worth goal was hiked to $155 from a previous $140.

Rounding out the protection shifts, Sweetgreen (SG) and Krispy Kreme (DNUT) had been downgraded to Equal Weight from prior Overweight rankings and Shake Shack was lower to a Sell-equivalent ranking. Harbour defined that unit progress, margins, and money technology metrics add to foot site visitors and worth proposition traits that loom giant in his ranking changes.

Read extra on Citi’s current downgrade of Cheesecake Factory.