Analysts See Cost Headwinds For Texas Roadhouse

Texas Roadhouse Inc (NASDAQ: TXRH) will see continued top-line growth with earnings held down by cost headwinds, a couple of analysts said Tuesday.

The restaurant chain recently met fourth-quarter earnings expectations and said same-store sales in the first period to date are up 12 percent.

Roadhouse, which operates about 450 restaurants nationwide, changed hands recently at $37.50, up $0.34.

Despite enviable sales growth in units open more than a year, higher wages and health care costs as well as inflation for beef prices will continue to pressure the company's margins, according to Morgan Stanley's John Glass.

The analyst maintained a Hold rating on the company along with a $37 price target.

Glass boosted his same-store sales growth estimate for 2015 to 5 percent, from 4 percent, but left his earnings forecast unchanged, citing higher costs.

Wunderlich's Robert M. Derrington likewise maintained a Hold rating but boosted his price target 21 percent to $40 a share,

The company has "an enviable track record" in boosting same-store sales and revenue, but Derrington said that record is "fairly reflected" in its share price.

Among 15 analysts following the company, 10 are at Hold and five are at Buy.