D-Wave Quantum falls nearly 3% as earnings miss overshadows revenue beat
Investing.com - UBS lowered its price target on CAVA Group Inc (NYSE:CAVA) to $96.00 from $112.00 while maintaining a Neutral rating ahead of the company’s second-quarter results. The stock, currently trading at $87.31, has experienced significant volatility, with InvestingPro data showing a 38.6% decline over the past six months despite strong fundamentals.
The Mediterranean fast-casual chain is expected to report second-quarter same-store sales slightly below consensus estimates of 6.4% on August 12, though UBS notes this would still represent strong performance relative to industry peers.
UBS anticipates CAVA’s restaurant-level margins and earnings will likely align with market expectations, with restaurant margins between 24.8-25.2% and adjusted EBITDA of $152-159 million potentially being reiterated by management.
The firm believes CAVA’s new store development plans remain on track, including guidance for 64-68 net new locations in 2025, though investor focus will likely center on the performance of stores entering their second year in the comparable base after strong first-year results.
UBS described CAVA as "a compelling growth story with a differentiated menu offering, attractive new unit returns, and future sales drivers," but cited valuation concerns and the need for evidence of continued growth amid challenging economic conditions before taking a more positive stance on the stock. InvestingPro analysis suggests the stock is currently overvalued, though it maintains a "GOOD" overall financial health score. Discover 16 additional exclusive ProTips and comprehensive valuation metrics with an InvestingPro subscription.
In other recent news, CAVA Group reported strong first-quarter performance, with adjusted EBITDA reaching $44.9 million, a significant increase from last year’s $33.3 million. This result surpassed both Loop Capital’s projection of $40.8 million and the consensus estimate of $43.9 million. The company’s adjusted earnings per share (EPS) was $0.22, exceeding Loop Capital’s forecast of $0.17 and the consensus estimate of $0.14. CAVA’s comparable sales growth stood at 10.8%, driven by a 3.3% rise in ticket prices and a 7.5% increase in traffic, surpassing the expected 10.0% growth.
In other developments, Melius Research initiated coverage of CAVA Group with a Hold rating and a price target of $95, while KeyBanc rated the company as Overweight, setting a $100 price target. Stifel adjusted its price target for CAVA to $125 from $175, citing challenging comparisons from the previous year’s Grilled Steak launch. Loop Capital maintained a Hold rating with a $100 price target, acknowledging CAVA’s impressive quarterly results. Additionally, CAVA Group shareholders approved board nominees and executive pay at the recent annual meeting, electing three Class II directors to serve until 2028.
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