Cava Stock: Analysts Rush to Raise Price Targets After Earnings
Wedbush, for one, issued a Street-high price target for Cava stock after its beat-and-raise quarter. Here's what you need to know.
Cava Group (CAVA) stock jumped more than 16% out of the gate Wednesday after the fast-casual Mediterranean restaurant chain beat top- and bottom-line expectations for its third quarter and raised its full-year outlook.
In the 12 weeks ended October 6, Cava's revenue increased 39% year over year to $243.8 million, driven by new restaurant openings and an 18.1% jump in same-restaurant sales. Its earnings per share improved 150% from the year-ago period to 15 cents.
"Our third quarter results demonstrate the strength of our Mediterranean category-defining brand and the broad appeal of our unique value proposition, creating what is quickly becoming the next major cultural cuisine category," said Cava CEO Brett Schulman in a statement. "Third quarter traffic grew 12.9%, we opened 11 net new restaurants and, driven by the power of our unit economic engine, we generated average unit volume of $2.8 million."
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The results easily beat analysts' expectations. Wall Street was anticipating revenue of $234 million and earnings of 11 cents per share, according to CNBC.
As a result of its strong performance in the first nine months of the year, Cava raised its full-year outlook. Here's what the company now expects to achieve:
| Metric | New outlook | Previous outlook |
|---|---|---|
| Net new restaurant openings | 56 to 58 | 54 to 57 |
| Same-restaurant sales growth | 12% to 13% | 8.5% to 9.5% |
| Restaurant-level profit margin | 24.5% to 25% | 24.2% to 24.7% |
| Adjusted EBITDA | $121 million to $126 million | $109 million to $114 million |
Is CAVA stock a buy, sell or hold?
Cava Group has been red hot on the price charts in 2024, nearly quadrupling in value for the year to date. Unsurprisingly, analysts are bullish on the consumer discretionary stock. According to S&P Global Market Intelligence, the consensus recommendation among analysts it tracks is a Buy.
However, analysts' price targets have not been able to keep up with the rally in the large-cap stock. Indeed, the average price target of $142.25 represents a steep discount to current levels. Analysts may very well raise their price targets in the days and weeks ahead following CAVA's beat-and-raise quarter.
Financial services firm Wedbush is one of the firms raising their price target on the stock after earnings, to a Street-high $190 from $155, while maintaining its Outperform (Buy) rating.
"We view CAVA as one of a handful of publicly traded restaurants positioned to deliver positive annual transaction growth over the longer-term, with realistic long-term revenue and unit growth targets," says Wedbush analyst Nick Setyan. "With improved near- and medium-term visibility, we also continue to view current 2024 and 2025 same-store sales growth and EBITDA [earnings before interest, taxes, depreciation and amortization] expectations as conservative."
Related Content
-
I'm 73 and hate winter, but I can't afford to be a snowbird.How can a snowbird wannabe warm up without the expense? We asked professional wealth planners for advice.
-
5 Smart Things to Do With Your Year-End BonusAfter you indulge your urge to splurge on a treat, consider doing adult things with the extra cash, like paying down debt, but also setting up a "fun fund."
-
Gen X Investors: Protect Your Portfolio From an AI BubbleAmid talk of an AI bubble, what's the best course of action for investors in their 50s and 60s, whose retirement savings are at risk from major market declines?
-
5 Smart Things to Do With Your Year-End Bonus, From a Financial Professional
After you indulge your urge to splurge on a treat, consider doing adult things with the extra cash, like paying down debt, but also setting up a "fun fund."
-
Are You a Gen X Investor? Here's How You Can Protect Your Portfolio From an AI Bubble
Amid talk of an AI bubble, what's the best course of action for investors in their 50s and 60s, whose retirement savings are at risk from major market declines?
-
Hey, Retirees: Put Your Charitable Gifts in a Donor-Advised Fund (and Enjoy Your Tax Break)A donor-advised fund is a simple (really!), tax-smart strategy that lets you contribute a large, tax-deductible gift now and then distribute grants over time.
-
Nasdaq Sinks 418 Points as Tech Chills: Stock Market TodayInvestors, traders and speculators are growing cooler to the AI revolution as winter approaches.
-
The Rule of Compounding: Why Time Is an Investor's Best FriendDescribed as both a "miracle" and a "wonder," compound interest is simply a function of time.
-
If You're a U.S. Retiree Living in Portugal, Your Tax Plan Needs a Post-NHR Strategy ASAPWhen your 10-year Non-Habitual Resident tax break ends, you could see your tax rate soar. Take steps to plan for this change well before the NHR window closes.
-
Stocks Chop as the Unemployment Rate Jumps: Stock Market TodayNovember job growth was stronger than expected, but sharp losses in October and a rising unemployment rate are worrying market participants.
-
The Delayed November Jobs Report Is Out. Here's What It Means for the Fed and Rate CutsThe November jobs report came in higher than expected, although it still shows plenty of signs of weakness in the labor market.
