Research firm Longbow downgraded Burger King owner Restaurant Brands to Underperform, its equivalent of a sell rating, from Neutral. Meanwhile, another research firm, Canaccord Genuity, significantly cut its September same-store sales estimate for casual dining restaurants.

RESTAURANT BRANDS DOWNGRADE: After Longbow conducted channel checks, Alton Stump, an analyst at the firm, wrote that the comparative sales growth of the company's two main chains, Canada's Tim Hortons and Burger King, had slowed recently. The trend was particularly strong at Burger King and the slowdown at that chain may have continued "at least" through the middle of the third quarter, Stump wrote. He said that, as of the end of August, his contacts at McDonald's (MCD) had heard that the comparative sales of major Burger King franchisees had dropped in Q3, versus the same period a year earlier. Meanwhile, competition within the fast food service sector has remained "intense" and Restaurant Brands is increasing its store count at a slower pace than previously, the analyst stated. Stump now expects Burger King's U.S. and Canada comp sales to be flat in Q3, versus his previous forecast of a 1.9% gain. The analyst predicted that the chain's U.S. and Canada comps would rise 1.5% for the year, versus his previous outlook of a 2.3% advance. He set a $35 price target on the stock.

CASUAL DINING ESTIMATE CUT: After Canaccord conducted channel checks, Lynne Collier, an analyst at the firm, cut her September same-store sales, or SSS, the estimate for the sector to -0.75% to -1.75% from -0.25% to -1.25%. Noting that the checks indicate that the sector's sales for the second week of September came in below her expectations, Collier thinks that its SSS may not rise this month versus August, as she had previously expected. The analyst now expects casual dining's SSS to drop by an average of 1% for the rest of the year. Companies in the sector include Brinker (EAT), Darden (DRI), Denny's (DENN), DineEquity (DIN), and Buffalo Wild Wings (BWLD ).

PRICE ACTION: In morning trading, Restaurant Brands dropped 2.4% to $59.26, Brinker added 0.4% to $52.75, Darden lost 0.2% to $62.93, and DineEquity was flat at $80.30 per share.