Guggenheim cuts Texas Roadhouse price target to $205, maintains Buy

On Tuesday, Guggenheim Securities adjusted its outlook on Texas Roadhouse (NASDAQ:TXRH) shares, reducing the price target from $215.00 to $205.00, while still endorsing the stock with a Buy rating. According to InvestingPro data, the stock currently trades at a P/E ratio of 31.4x and shows strong momentum with a 42.7% return over the past year. The firm’s analyst cited several factors influencing the revision, including a modest decrease in the 2025 earnings per share (EPS) estimates, now set at $7.10 compared to the previous $7.40, and a slight decline from the consensus of $7.19.

The analyst anticipates that the fourth-quarter results for Texas Roadhouse will align closely with the consensus, projecting an EPS of $1.66 alongside a 7.5% increase in same-store sales (SSS). With an InvestingPro Financial Health Score rated as "GREAT" and revenue growth of 13.9% in the last twelve months, the company maintains solid operational performance. Despite early 2025 showing softness due to harsh weather conditions and a generally sluggish industry performance, the analyst remains optimistic. January’s typically light sales figures are considered volatile, and a rebound is expected in the following months.

The report also notes that rising cattle prices and steak inflation have been observed over recent months, potentially leading to higher costs of goods sold (COGS) in 2025. The firm now forecasts a 3.5% increase in COGS, up from the previously estimated 2.5%. However, this pressure is expected to be mitigated by a 50 basis point increase in pricing and a 50 basis point reduction in the full-year comp to 5.4%.

Guggenheim’s analysis also includes a breakdown of comparative sales by day of the week, revealing that the most significant growth is occurring on Thursdays, Fridays, and Saturdays. This trend is seen as a positive indicator for the restaurant chain’s capacity to continue capturing a substantial market share within the steak category. For deeper insights into Texas Roadhouse’s performance metrics and growth potential, investors can access comprehensive analysis through InvestingPro, which offers exclusive financial health scores and over 10 additional ProTips.

In other recent news, Texas Roadhouse has been the subject of several analyst updates and company actions. Morgan Stanley (NYSE:MS) upgraded Texas Roadhouse’s stock from Equalweight to Overweight, citing strong performance, margin improvements, and the growth prospects of its Bubba’s expansion. The firm also increased the price target to $213.00, up from the previous target of $205.00.

On the other hand, Loop Capital maintained a Buy rating and a $215.00 price target on Texas Roadhouse stock, highlighting the company’s consistent performance and potential for earnings growth. The firm noted that Texas Roadhouse has surpassed comparable sales expectations in ten of the previous eleven quarters.

Texas Roadhouse also signed new employment agreements with key executive officers, including CEO Jerry Morgan and CFO Chris Monroe. The contracts, which establish a term expiring on January 7, 2028, outline potential short-term cash incentive opportunities based on company performance metrics.

Goldman Sachs initiated coverage on Texas Roadhouse with a Neutral rating and a price target of $213.00. The firm recognized Texas Roadhouse’s post-COVID success and its ability to maintain prices below inflation while focusing on in-store service quality.

Lastly, Texas Roadhouse’s Board of Directors approved a cash dividend of $0.61 per share of common stock for its shareholders, demonstrating the company’s financial health and commitment to its investors. These are just a few of the recent developments surrounding Texas Roadhouse.

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