Cheesecake Factory Shares Rise

Analyst Christopher O'Cull raised his rating on the shares to "Buy" from "Neutral."

The analysts said in a note to investors that the company's plans to lower the number of new restaurants it opens may be a positive step for the brand long-term.

Last month, Cheesecake Factory said it would open 17 restaurants in 2008. The company opened 21 in 2007.

"While fewer unit openings negatively impacts top-line growth, it benefits the margin by reducing the amount of pre-opening expense during the year, thus the company is targeting net income growth to outpace revenue during 2008," he said.

O'Cull added that Cheesecake Factory has withstood a difficult operating environment well while some of its peers in the casual dining sector have faltered. The sector has been plagued by lower consumer spending and higher raw material and labor costs. The spending and cost concerns have taken a toll on profit at companies like P.F. Chang's China Bistro and Ruby Tuesday Inc.

Cheesecake Factory, meanwhile, last month reported a 2 percent profit rise in its third quarter.

"Though inauspicious macroeconomic factors have weakened overall casual dining margin and overall profitability during the past year, on a relative basis The Cheesecake Factory has clearly outperformed the casual dining segment," he said.

Cheesecake Factory shares rose 71 cents, or 3.3 percent, to close at $22.37 Monday.