Street Calls of the Week
Investing.com - TD Cowen has reduced its price target on Darden Restaurants (NYSE:DRI) to $200.00 from $235.00 while maintaining a Hold rating on the stock. According to InvestingPro data, the stock has fallen 9.35% in the past week, with analysts’ targets now ranging from $157 to $255.
The firm’s analyst noted that Darden is "executing well" but no longer faces the easier year-over-year comparisons at its Olive Garden chain that had previously benefited the company.
TD Cowen expressed surprise at the magnitude of the recent decline in Darden’s share price, attributing it to elevated expectations for Olive Garden performance and shares that had outperformed the sector over the previous four weeks.
Despite the price target reduction, TD Cowen maintained its earnings per share estimates for the restaurant company, which operates chains including Olive Garden, LongHorn Steakhouse, and The Capital Grille.
The firm identified Darden’s potential addition of Olive Garden to the Uber Eats third-party marketplace as the next catalyst for the stock, noting that while management remains noncommittal about such a move, analysts view it as "a matter of when, not if."
In other recent news, Darden Restaurants reported its first-quarter fiscal 2026 results, revealing adjusted earnings per share of $1.97, slightly below the consensus estimate of $2.01. The company’s sales reached $3.045 billion, aligning with forecasts, though restaurant margins were softer at 18.7% compared to the anticipated 19.2%. Following these results, Truist Securities lowered its price target for Darden Restaurants to $240 from $252, while maintaining a Buy rating, citing missed same-store sales and earnings expectations. KeyBanc also reduced its price target to $225 from $240, expressing concerns over margin performance but kept an Overweight rating. Meanwhile, UBS reiterated its Buy rating with a $245 price target, highlighting solid sales growth despite the earnings miss. TD Cowen maintained a Hold rating with a $200 price target, noting the stock’s recent decline due to elevated expectations for the Olive Garden brand. Additionally, Darden Restaurants announced a $17 million equity award for CEO Ricardo Cardenas, set to vest in 2030, contingent on performance metrics. These developments reflect the company’s ongoing financial and strategic positioning in the market.
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