According to Baird, the Darden restaurant is due for a pause after the recent rally. Analyst David Tarantino downgraded Olive Garden Parent to Neutral from Outperform, saying “risk/reward looks more balanced” after the stock’s recent outperformance. Including dividends, the company returned 1% to shareholders, while the S&P 500 lost 16%. Shares of Darden are up more than 16% in the fourth quarter. “We still take a very positive view of the company’s internal operating fundamentals, and believe that DRI is on track to deliver good results in FQ2-FQ3, but when it comes to year-to-date outperformance for the stock and beyond Given the risk associated with the macro outlook, we simply believe that the risk/reward on DRI has become more balanced on existing valuation metrics,” Tarantino said. Tarantino said that although both the company and the wider casual dining industry have done decently, conditions in the sector’s favor are beginning to turn and hint at a possible downturn in 2023. He added, “While we view Darden as relatively well-positioned to navigate the slowing economy, we highlight the risk that difficult macro conditions could cause revenue trends to outpace current model assumptions for FQ4/F2024.” potentially posing some risk to earnings estimates.” Along with the downgrade, Baird raised his price target on the stock to $150 per share, meaning the stock should hover near current levels. The stock has declined 2.5% this year. Tarantino remains confident in the long-term outlook for Darden Restaurants and said a pullback in the stock, or increased confidence in the casual dining industry, would warrant a positive sentiment turnaround. — CNBC’s Michael Bloom contributed reporting