On Monday, Citi reiterated its Buy rating for First Watch (NASDAQ:FWRG) shares. The firm's analysis highlighted that First Watch's fourth-quarter 2024 performance exceeded expectations.
Despite a decrease in traffic and same-store sales (SSS) by 3% and 0.3% respectively, the results were more favorable than anticipated and surpassed both Citi's and the Street's SSS estimates, which predicted declines of 1.8% and 1.6%.
The company's quarterly results also showed improvement on a quarter-over-quarter basis, both over one and two years. First Watch met its year-end goal for new store openings, with a total of 572 stores, though with a shift in the mix of company-owned and franchised stores by one.
Citi's commentary emphasized the positive outlook for First Watch, noting the company's ability to progress on SSS while achieving high single-digit unit growth, approximately 9%.
This growth trajectory is seen as a supportive factor for potential multiple expansion. The firm maintained its price target of $27.00. Furthermore, the firm pointed out the opportunity for First Watch to enhance brand awareness and fuel SSS growth through targeted marketing efforts, given that the company's brand recognition is currently lower than that of its national competitors.
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