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On Thursday, Guggenheim Securities adjusted its outlook on Texas Roadhouse (NASDAQ:TXRH) shares, lowering the price target to $200 from the previous target of $205, while still maintaining a Buy rating on the stock. The decision came after the firm revised its earnings per share (EPS) estimates for the years 2025 and 2026 to $6.80 and $7.70, respectively, down from the earlier forecasts of $7.10 and $8.00. According to InvestingPro data, 23 analysts have recently revised their earnings expectations downward, with analyst targets ranging from $139.78 to $232.
The revision reflects a cautious stance on the restaurant industry’s performance at the beginning of 2025 and the slight increase in costs associated with the steak basket, an essential component of Texas Roadhouse’s menu. Despite the challenges, Guggenheim’s analysts believe that Texas Roadhouse remains one of the most promising growth stories in the restaurant sector. The company’s strong financial health is evidenced by its perfect Piotroski Score of 9, as reported by InvestingPro, and impressive revenue growth of 16% over the last twelve months.
The analysts justify their continued endorsement of a Buy rating by pointing to the company’s reasonable valuation, which stands at 23 times the projected earnings for 2026. The new price target of $200 still applies a 26 times multiple to the expected 2026 earnings, indicating confidence in the stock’s future performance.
In addition to revising EPS estimates and price targets, Guggenheim’s analysis included an examination of operational hours across Texas Roadhouse stores. This review revealed that weekly operating hours per store have seen an increase of 4.6% compared to five years prior, suggesting an expansion in operational capacity and potentially greater revenue opportunities for the company.
In other recent news, Texas Roadhouse reported its fourth-quarter results, which included a 7.7% growth in same-store sales, slightly above the consensus of 7.5%. Despite the positive earnings per share (EPS) of $1.73, surpassing expectations, the company has experienced a slowdown in sales momentum in the first quarter, with same-store sales rising only 2.9% due to weather conditions and calendar shifts. RBC Capital Markets adjusted its price target for Texas Roadhouse to $180 from $200, citing mixed results and ongoing concerns about inflation and consumer traffic. Truist Securities also revised its price target from $209 to $205, maintaining a Buy rating, while noting strong underlying trends and estimating a 5% growth in same-store sales. Stifel analysts lowered their price target to $172 from $185, keeping a Hold rating, and highlighted the impact of increased commodity inflation expectations for 2025. Meanwhile, KeyBanc maintained a Sector Weight rating, acknowledging robust fourth-quarter performance but noting a deceleration in sales growth. Benchmark reiterated its Hold rating, indicating a steady outlook without significant changes to the investment thesis. These developments reflect a range of economic challenges and adjustments in expectations for Texas Roadhouse.
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