Darden Restaurants stock rating reiterated at Buy by UBS on growth outlook

Investing.com - UBS has reiterated its Buy rating on Darden Restaurants (NYSE:DRI) with a price target of $230.00 following recent investor meetings with the company’s leadership team. According to InvestingPro data, analyst targets for the stock range from $160 to $259, with the current price near $189.

The meetings included Darden President and CEO Rick Cardenas, CFO Raj Vennam, and VP of Finance and Investor Relations Courtney Aquilla, where management expressed a positive outlook despite macroeconomic and industry challenges. The company’s resilience is reflected in its 31-year track record of maintaining dividend payments and recent 7% dividend growth.

UBS noted that management believes Darden’s brand portfolio is positioned for continued top-line momentum and has competitive advantages that will drive further market share gains in the casual dining segment.

Investor discussions during the meetings centered on consumer health, casual dining resilience, and drivers of Darden’s long-term growth across key initiatives and optionality, according to UBS.

The firm stated it views Darden shares as attractive at approximately 16 times consensus fiscal year 2027 earnings per share, describing the company as a "quality compounder" with above-average top-line resiliency in a challenging macro environment and the ability to protect margins despite elevated inflation.

In other recent news, Darden Restaurants has faced several updates concerning its financial outlook and executive decisions. The company’s first-quarter fiscal 2026 results revealed solid sales momentum but were overshadowed by lower margins and earnings due to increased labor and operating expenses. Despite this, Darden raised its fiscal year 2026 sales guidance, signaling optimism about future growth. In response to these earnings, UBS lowered its price target for Darden to $230, maintaining a Buy rating, while Truist Securities adjusted its target to $240, also retaining a Buy rating. Meanwhile, TD Cowen reduced its price target to $200, maintaining a Hold rating, and noted that Darden’s Olive Garden chain no longer benefits from easier year-over-year comparisons.

Additionally, Darden Restaurants announced a significant equity award for its CEO, Ricardo Cardenas. The board approved a performance stock unit award with a target value of $17 million, contingent on the company’s total shareholder return relative to the S&P 500. This award is part of the company’s Amended & Restated 2015 Omnibus Incentive Plan and reflects Darden’s commitment to aligning executive compensation with shareholder performance. These developments highlight the company’s ongoing efforts to navigate market challenges while focusing on long-term growth and leadership incentives.

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