Street Calls of the Week
Investing.com - Goldman Sachs initiated coverage on CAVA Group Inc (NYSE:CAVA) with a Neutral rating and a $74.00 price target, implying 17% upside potential. According to InvestingPro data, CAVA currently trades at $62.86, with analyst targets ranging from $70 to $125, suggesting significant potential upside despite recent volatility.
The fast-casual Mediterranean restaurant chain, founded in 2011, currently operates approximately 400 stores across 28 states and the District of Columbia, offering bowls, salads, and pitas made with healthful, holistically-sourced ingredients. The company maintains strong financial health with a current ratio of 2.72 and operates with moderate debt levels, as revealed in InvestingPro’s comprehensive analysis.
Goldman Sachs projects robust long-term growth for CAVA, forecasting approximately 22% total revenue compound annual growth rate (CAGR) between 2024-2027, including about 18% unit CAGR and average 4% same-store sales growth.
The investment bank also expects CAVA to maintain mid-20% restaurant level margins and achieve approximately 27% EBITDA CAGR through 2027, noting the company’s attractive return profile that exceeds 40% year-two cash-on-cash return targets.
Despite these positive long-term projections, Goldman Sachs cited near-term uncertainties that could impact CAVA’s stock performance, including difficult year-over-year comparisons following the June 2024 steak launch, a potential "honeymoon effect" from 2024/2025 store openings, and challenging macroeconomic and competitive conditions amid industry-wide focus on value offerings. With a beta of 2.53 and significant price volatility, investors seeking deeper insights can access over 15 additional ProTips and detailed valuation metrics through InvestingPro’s exclusive research reports.
In other recent news, CAVA Group has been the focus of several analyst updates and business developments. RBC Capital initiated coverage of CAVA Group with an Outperform rating and set a price target of $80, citing the company’s improving unit economics and increased unit growth guidance. Meanwhile, Jefferies maintained its Buy rating with a $100 price target, viewing the recent stock pullback as a buying opportunity and expecting same-store sales to improve through 2026. On a different note, CFRA lowered its price target for CAVA Group to $120, citing expectations for slower comparable sales growth in 2025 due to softer consumer spending.
In terms of business expansion, CAVA Group opened its first Miami location in Brickell, marking its third restaurant in South Florida this year. The new restaurant offers dining room and patio seating, along with digital order pick-up and delivery options. However, a recent Business Insider report criticized the value propositions of fast-casual restaurant chains, including CAVA, which contributed to a decline in their stock prices. Despite these challenges, analysts from various firms express differing levels of optimism regarding CAVA Group’s growth potential and market performance.
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