This morning, Wall Street research firms Jefferies and Oppenheimer updated their ratings for several restaurant names. While Oppenheimer analyst Brian Bittner upgraded Panera Bread (PNRA) to Outperform, a buy-equivalent rating, on its "attractive setup" into 2018, his peer at Jefferies downgraded Dunkin' Brands (DNKN) and Cheesecake Factory (CAKE) to Underperform, the firm's equivalent of a sell rating.

BUY BREAD: In a research note commenting on the restaurant sector, Oppenheimer's Bittner upgraded Panera Bread to Outperform from Perform, saying that while strategic investments will keep 2017 earnings growth constrained, the "attractive setup" into 2018 "can no longer be ignored." Profit accretion from delivery and strategic investments will "magnify" while sales payoffs continue to ramp, the analyst told investors. Furthermore, Bittner said he is convinced delivery represents a large sales and profit opportunity, calling Panera "the most aggressive non-pizza player" going after the delivery market with its own build-out. 2018 will be the largest profit accretion year as it laps 2017's startup costs with more mature sales levels, he contended.

SELL DONUTS, CHEESECAKE: In a note of his own discussing the restaurant sector, Jefferies analyst Andy Barish noted that fourth quarter same-store sales challenges persisted for the industry and margins will likely be pressured by labor and brand investments. The analyst downgraded Dunkin' Brands to Underperform from Hold, saying he does not believe same-store sales have broken out above 2% and pointing out that international growth has been disappointing. Barish also cut his rating on Cheesecake Factory to Underperform from Hold, citing the 15% post-election rally with no change in fundamentals along with the company's "significant" mall exposure. While Cheesecake Factory remains a high quality casual dining operator, the analyst believes it is subject to multiple compression without "significant" new unit growth opportunities.

MOVING TO THE SIDELINES: Additionally, Jefferies' Barish downgraded Wingstop (WING) to Hold from Buy, saying the positives, such as visibility to stronger same-store sales and the company's highly franchised business model, are fully discounted in the stock at current levels. Meanwhile, Oppenheimer's Bittner also cut his rating on Bob Evans (BOBE) to Perform from Outperform, as he sees limited upside to future earnings per share estimates and lacks conviction that same-store sales will soon turn positive. While the analyst understands investors' want for a business split, he does not see major upside from it at this time.

PRICE ACTION: In late morning trading, shares of Panera and Wingstop gained about 2% each and Dunkin's Brands' stock was fractionally higher. Meanwhile, shares of Cheesecake Factory were fractionally higher as well and Bob Evans' stock slid slightly.