Citi raises CAVA stock price target to $115, maintains neutral rating

On Friday, Citi analyst Jon Tower adjusted the price target for CAVA Group Inc (NYSE:CAVA), increasing it slightly to $115 from $114, while keeping a Neutral stance on the stock. The adjustment follows the company’s release of its first-quarter results and guidance for 2025, which Tower highlighted as positive compared to the performance of other fast casual dining concepts. According to InvestingPro data, CAVA’s market capitalization stands at $11.45 billion, with the stock currently trading at $99.06, showing a strong 5.48% return over the past week despite broader market challenges.

CAVA Group reported first-quarter results that stood out positively in an industry facing numerous challenges. Many competitors in the fast casual sector have reported disappointing comparable store sales (comps) and have revised their revenue forecasts downward. Despite these industry headwinds, CAVA Group has maintained its forecast for comp growth at 6-8% for the year 2025. InvestingPro analysis reveals the company’s strong financial health, with a current ratio of 2.97 and revenue growth forecast of 23% for FY2025. For deeper insights into CAVA’s growth potential and comprehensive analysis, investors can access the detailed Pro Research Report, available exclusively to InvestingPro subscribers.

The company’s guidance for 2025 EBITDA (earnings before interest, taxes, depreciation, and amortization) has reached the high end of analyst expectations, aligning with the consensus. This suggests that the cycle of positive earnings revisions that CAVA has experienced may be entering a period of stabilization.

Tower’s commentary on the company’s performance and outlook was cautiously optimistic. He acknowledged the solid results and outlook in absolute terms but pointed out the difficulty in arguing for a significant near-term (NT) upside in the stock’s value. This is because financial estimates have not increased substantially after the earnings report, and the stock is trading at approximately 55 times its projected 2026 EBITDA.

CAVA Group’s stock price target revision by Citi reflects a nuanced view of the company’s financial prospects. While the slight increase in the target price indicates some confidence in the company’s performance, the neutral rating and commentary suggest a conservative approach to the stock’s future valuation.

In other recent news, CAVA Group Inc. exceeded expectations for Q1 2025, with an earnings per share (EPS) of $0.22, significantly higher than the forecasted $0.02. The company’s revenue also outperformed projections, reaching $331.83 million compared to the anticipated $280.93 million. This strong financial performance was accompanied by the opening of 15 new restaurants, expanding CAVA’s presence to 382 locations. Despite these positive results, CAVA’s stock experienced a decline in after-hours trading. The company has ambitious plans for further expansion, aiming to open 64-68 new restaurants this year and achieve a restaurant-level profit margin of 24.8-25.2%. Additionally, CAVA’s loyalty program is nearing 8 million members, with plans to introduce a tiered structure later in 2025. Analysts from firms like William Blair have inquired about this loyalty initiative, reflecting interest in CAVA’s strategic growth and consumer engagement efforts.

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