Is this U.S.-China selloff a buy? A top Wall Street voice weighs in
Investing.com - Bernstein SocGen Group has reiterated an Outperform rating and $230.00 price target on Darden Restaurants (NYSE:DRI) stock, following an 8% decline in share price after recent results. According to InvestingPro data, the stock has fallen 9.35% in the past week, with technical indicators suggesting oversold conditions.
The firm expects Darden to continue gaining market share in casual dining and steakhouse segments while maintaining prudent margin management. With a robust market capitalization of $22.47 billion and steady revenue growth of 8.3%, Bernstein views the recent stock movement as an opportunity to emphasize the company’s potential as a long-term compounder.
Darden’s strategy of pricing below inflation, investing in marketing, and offering smaller portions at lower prices is expected to generate sufficient traffic to maintain margins, according to the research note.
The restaurant operator’s resilience in traffic-led comparable sales growth could attract investor attention, particularly in the current challenging macroeconomic environment.
Bernstein highlighted that Darden’s valuation has dropped to 17 times next-twelve-months price-to-earnings ratio, below its five-year average, despite having more strategic options available.
In other recent news, Darden Restaurants reported its fiscal first-quarter 2025 earnings, revealing a slight miss on both earnings per share (EPS) and revenue compared to analyst forecasts. The company posted an EPS of $1.97, falling short of the expected $2, and reported revenue of $3 billion, missing the $3.04 billion forecast. This earnings miss has been attributed to lower restaurant margins and higher general and administrative expenses. BMO Capital responded by lowering its price target for Darden Restaurants to $205 from $215, maintaining a Market Perform rating. Wells Fargo also reduced its price target to $200 from $225, citing concerns about weak profit flow-through and rising costs, despite positive comparable sales. Evercore ISI lowered its price target to $240 from $245, maintaining an Outperform rating, due to concerns that Darden’s pricing will trail inflation more than expected. These adjustments reflect a cautious outlook from analysts regarding Darden’s financial performance amid ongoing economic challenges.
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