Fast-food chain Sonic (SONC: sentiment, chart, options) lowered its outlook for fiscal 2008 today, adjusting its range for expected net income growth from 15%-17% to 9%-12%. Based on the company's 2007 results, this would peg 2008 earnings at $1.05 to $1.07 per share, below analysts' expectations for full-year earnings of $1.11 per share.

Additionally, Sonic said it expects third-quarter same-store sales to come in below prior forecasts based on weakness in March sales figures. In addition to the ominous March results, Sonic predicts that higher commodity and labor costs, along with a higher tax rate, to weigh on third-quarter results.

In response, Morgan Stanley slashed its 2008 earnings-per-share outlook from $1.09 to $1.03. The brokerage also noted that sector heavyweights, such as McDonald's (MCD) and Jack in the Box (JBX), are ramping up their beverage offerings an arena where SONC has historically been strong. With more competitors throwing their hats in the ring, pressure on SONC is only expected to rise.

As we head into the afternoon, SONC is down more than 9%. The plunge has SONC testing tenuous round-number support from the 20 level. The stock could be punished if today's news encourages short sellers to add to their already-sizable position on SONC (currently, 17% of the equity's float is sold short).