Cava Group stock price target lowered to $90 by TD Cowen on sales maturation concerns

Investing.com - TD Cowen has lowered its price target on Cava Group Inc (NYSE:CAVA) to $90.00 from $120.00 while maintaining a Buy rating on the Mediterranean fast-casual restaurant chain. The stock, currently trading at $70.84, has experienced significant volatility, with InvestingPro data showing it’s near its 52-week low after declining over 35% in the past six months.

The firm cited concerns that CAVA shares might remain "in the penalty box" until more details emerge about the new store sales maturation trajectory and whether this could prevent the company from achieving mid-single-digit same-store sales growth in 2026. Despite these concerns, InvestingPro data reveals impressive revenue growth of 32.11% in the last twelve months, with analysts forecasting 23% growth for the current year.

Despite the reduced price target, TD Cowen expressed encouragement about CAVA’s new store sales strength, which demonstrates the "increasing portability of the concept." The firm maintained its 2025-2026 adjusted EBITDA estimates despite what it described as a "softer sales environment." The company maintains a strong financial position with a healthy current ratio of 3.0, indicating robust liquidity to support its expansion plans.

TD Cowen highlighted that CAVA is experiencing strengthening new store economics, with first-year average unit volumes (AUVs) annualizing above $3 million, exceeding 2024’s approximately $2.6 million. The firm estimates this leads to new store cash-on-cash returns exceeding 50%, up from the 40%+ disclosed at the end of 2024 and 35%+ at the time of the company’s 2023 IPO.

These improving store economics provide TD Cowen with "greater conviction" in management’s target of 1,000 U.S. stores by 2032 and builds credibility for CAVA’s long-term potential to exceed 2,000 locations in the United States.

In other recent news, Cava Group has faced several analyst adjustments following its second-quarter results. The company reported same-store sales growth of 2.1%, which fell short of the consensus expectation of around 6%. Revenue was also slightly below projections, with Cava reporting $280.6 million compared to the $283.6 million anticipated by analysts. Several firms, including Piper Sandler, BofA Securities, UBS, Baird, and Jefferies, have lowered their price targets for Cava Group, citing slower sales growth and challenging year-over-year comparisons. Piper Sandler and Jefferies both reduced their targets to $100, while UBS set a new target at $75. Despite these adjustments, firms like Piper Sandler and BofA Securities maintained positive ratings, such as Overweight and Buy, respectively. Jefferies noted an EBITDA beat due to improved restaurant-level margins and lower administrative expenses. Baird attributed the performance to macroeconomic headwinds rather than issues with Cava’s brand.

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