Guggenheim on Thursday advised clients to buy shares of Darden Restaurants, which operates the Olive Garden and LongHorn Steakhouse chains, as a potential increase in disposable income under President-elect Donald Trump could benefit casual dining stocks.
"Our bias is to increase exposure to the more discretionary casual dining segment, as opposed to the more staple in nature quick service, given the outlook for consumer stimulus and already improving consumer confidence," analyst Matthew DiFrisco wrote in a note to clients.
On the back of those expectations, the analyst upgraded Darden to buy from neutral, and downgraded McDonald's and Wendy's to neutral from buy.
DiFrisco said the Trump rally has pushed consumer confidence above 100, given expectations for tax cuts, increases in the minimum wage and other economic investments. Historically, he says these factors have benefited casual dining stocks.