Cheesecake Factory (CAKE) is expected to post Q2 same-store sales and earnings per share above consensus estimates, though recent share gains suggest the upside may already be priced in, UBS Securities said in an earnings preview on Friday.

The firm models Q2 revenue of $949.9 million, slightly ahead of the consensus $946.9 million, and same-store sales growth of 1.4% for the Cheesecake brand, supported by 4% pricing, partly offset by declines in mix and traffic.

The firm anticipates restaurant-level margins of 16.6%, about 50 basis points higher year-over-year, as pricing more than offsets modest inflation in food and labor costs.

Beyond Q2, investor focus is expected to shift to traffic trends and the sustainability of momentum, including the impact of pricing, product mix, and foot traffic, according to the note.

Promotional efforts, improved guest satisfaction scores, and loyalty programs are supporting recent momentum, though UBS flagged macroeconomic pressures and competition as ongoing risks.

The firm said margins are projected to remain strong in 2025, though it sees challenges to achieving Cheesecake Factory's long-term restaurant margin target of 17% to 18%, citing normalizing pricing power and persistent inflation.

UBS raised its price target to $50 from $45, with a sell rating.

Price: 62.83, Change: +0.92, Percent Change: +1.49