Cava Group stock price target lowered to $100 by BofA Securities

Investing.com - BofA Securities has lowered its price target on CAVA Group Inc (NYSE:CAVA) to $100.00 from $121.00 while maintaining a Buy rating on the Mediterranean fast-casual restaurant chain. According to InvestingPro data, CAVA currently trades at a P/E ratio of 68.6x, suggesting a premium valuation despite the stock’s 35% decline over the past six months.

The adjustment follows CAVA’s modest revenue miss, with the company reporting $280.6 million versus analyst expectations of $283.6 million. Same-store sales growth came in at 2.1%, significantly below the 6.2% consensus forecast. Despite the miss, InvestingPro analysis shows the company maintains strong financial health with a current ratio of 3.0 and operates with a moderate debt level.

BofA Securities attributes the performance to "an evolving restaurant maturity curve" where new locations initially open with above-average sales before moderating and eventually returning to growth. New units are currently opening at 109% of system average sales.

The firm noted that while the tailwind to comparable sales from store maturation has moderated, the strong performance of new units across diverse markets remains encouraging.

BofA specifically highlighted new location strength in markets of varying sizes, including major metropolitan areas like Chicago, Illinois and smaller markets such as Lafayette, Louisiana.

In other recent news, Cava Group has reported its second-quarter earnings, revealing challenges with same-store sales growth. UBS has lowered its price target for Cava Group to $75, maintaining a Neutral rating, due to softer sales momentum and challenges from newer locations. Baird also reduced its price target to $95, attributing the disappointing sales to macroeconomic headwinds and difficult year-over-year comparisons, though it maintains an Outperform rating. Jefferies adjusted its price target to $100, noting that despite a sales miss, Cava Group achieved an EBITDA beat through improved margins and lower expenses, and continues to rate the stock as a Buy.

KeyBanc Capital Markets decreased its price target to $85, citing missed consensus estimates for same-store sales trends. Meanwhile, Stifel has reiterated its Buy rating with a $125 price target, viewing the recent stock pullback as a buying opportunity despite the company’s sales growth falling short of expectations. These developments highlight the varied analyst perspectives on Cava Group’s recent financial performance and future potential.

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