On Thursday, Raymond (NS:RYMD) James maintained its Outperform rating on Darden Restaurants (NYSE:NYSE:DRI) stock and increased the price target to $200 from $175. The boost in the target follows Darden Restaurants’ second fiscal quarter results, which saw a return to positive comparable sales at its Olive Garden chain and strong performance from Longhorn Steakhouse.
According to InvestingPro data, the stock is trading near its 52-week high of $177.67, with a market capitalization of $21.54 billion. The company has maintained dividend payments for 30 consecutive years, demonstrating consistent shareholder returns.
The analyst from Raymond James highlighted the 1.3% rise in underlying comparable sales at Olive Garden and a significant 6.8% increase at Longhorn. The firm’s confidence is rooted in the expectation of a continued recovery in comparable sales at Olive Garden into calendar year 2025.
This optimism is based on several strategic moves by the company, including new value and product initiatives set to launch in January, the introduction of first-party delivery in partnership with Uber (NYSE:UBER), and an anticipated firming of industry trends. The company’s revenue growth of 6% in the last twelve months supports this positive outlook.
Darden’s stock experienced a notable upswing of approximately 15% on Wednesday, which might lead to a period of stabilization. Nevertheless, the raised price target to $200 is justified by the forecasted fiscal year 2026 price-to-earnings ratio of around 19 times, and an enterprise value to EBITDA ratio just under 12 times. Currently trading at a P/E ratio of 21.13, InvestingPro analysis suggests the stock is trading above its Fair Value.
The analyst views Darden as a solid investment choice within the U.S. consumer sector, with clear drivers for comparable sales growth and a valuation that remains attractive. For deeper insights into Darden’s valuation and 12 additional exclusive ProTips, consider accessing the comprehensive Pro Research Report.
The report concluded with a positive outlook on Darden Restaurants, citing it as a quality investment against the backdrop of increasing macroeconomic optimism heading into calendar year 2025.
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