KeyBanc lifts Darden Restaurants stock target to $220

On Friday, a KeyBanc analyst increased the price target on Darden Restaurants (NYSE:DRI) shares to $220 from the previous $200, while maintaining an Overweight rating on the stock. The stock, currently trading at $199.45, has delivered an impressive 26.24% return over the past year. According to InvestingPro data, analyst targets for the stock range from $145 to $235, with 10 analysts recently revising their earnings estimates upward. The decision comes after Darden reported third-quarter fiscal year 2025 earnings per share (EPS) that aligned closely with expectations. Notably, stronger-than-anticipated restaurant-level margins compensated for a slight shortfall in same-store sales (SSS) growth. The minor SSS growth miss was attributed to weather-related issues and calendar shifts. With a market capitalization of $23.28 billion and a P/E ratio of 22.18x, InvestingPro analysis indicates the stock is currently trading above its Fair Value.

The company’s recent commentary provided insights that may have alleviated concerns about a potential industry-wide slowdown. Darden’s unique perspective on consumer behavior, coupled with an unexpected improvement in SSS trends during the initial three weeks of the fourth quarter, contributed to this more positive outlook. Furthermore, Darden has identified concrete opportunities to boost SSS growth in the upcoming months. The company’s stock is trading near its 52-week high of $203.47, reflecting strong investor confidence. Discover more insights about Darden’s financial health and growth prospects in the comprehensive Pro Research Report, available exclusively on InvestingPro.

In light of these factors, KeyBanc has decided to maintain its Overweight rating on Darden Restaurants. The raised price target to $220 reflects a more optimistic view of the company’s top-line performance anticipated in the fourth quarter of fiscal year 2025. The analyst has also adjusted the full-year 2025 EPS forecast to account for this optimism and updated the fiscal year 2026 EPS to include the benefits of a 53rd week and a slightly higher SSS growth projection.

The new price target of $220 is based on approximately 20.5 times KeyBanc’s projected fiscal year 2026 EPS, excluding a $0.20 benefit from the additional week. Market participants and investors are expected to gain further insights from Darden’s management team during virtual meetings scheduled for April 24, 2025.

In other recent news, Darden Restaurants has been the focus of several analyst updates following its third fiscal quarter earnings report. UBS analyst Dennis Geiger raised the price target for Darden to $225, maintaining a Buy rating, citing the company’s resilient sales trends and strategic plans for fiscal year 2026. Stifel analysts also increased their price target to $215, noting that while earnings per share met expectations at $2.80, comparable sales were softer than anticipated. However, they highlighted cost management as a positive factor. BofA Securities analyst Sara Senatore set a new price target of $238, emphasizing strong same-store sales growth despite weather-related challenges and the promising results from Olive Garden’s partnership with Uber (NYSE:UBER) Direct.

BTIG analyst Peter Saleh adjusted his price target to $210, expressing optimism about Darden’s same-store sales acceleration in March. He pointed to the company’s marketing strategies and the Uber Direct delivery partnership as potential drivers of market share growth. Across these analyses, the continued development of the Uber Direct partnership at Olive Garden is seen as a significant opportunity for enhancing sales. Analysts remain confident in Darden’s ability to navigate industry challenges, with various firms maintaining a Buy rating on the stock. The company’s strategic initiatives and operational efficiencies are expected to support its financial performance moving forward.

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