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Investing.com - Mizuho has reduced its price target on Darden Restaurants (NYSE:DRI) to $185.00 from $190.00 while maintaining a Neutral rating on the stock. The restaurant chain, currently trading at $174.72, is considered slightly undervalued according to InvestingPro’s Fair Value model. Analyst targets for the stock range from $160 to $259, with the consensus recommendation leaning toward Buy at 1.94.
The adjustment comes after Mizuho’s market checks indicated same-store sales growth at Olive Garden may have slowed during the second quarter, primarily driven by lower check averages rather than reduced customer traffic. The firm lowered its Q2 and fiscal 2026 Olive Garden same-store sales growth estimates to 3.0% from 3.8% and to 3.6% from 3.9%, respectively. This comes as Darden posted 8.3% revenue growth in the last twelve months, with total revenue reaching $12.36 billion.
Conversely, Mizuho noted potential upside at LongHorn Steakhouse, citing the chain’s expanding value proposition. The firm raised its Q2 and fiscal 2026 LongHorn same-store sales growth estimates to 4.0% from 3.5% and to 4.4% from 4.1%, respectively.
Mizuho increased its fiscal 2026 and 2027 cost of goods sold estimates due to the higher top-line contribution from LongHorn, which has lower relative margins, and mix shifts within Olive Garden toward value offerings. The firm also highlighted that beef coverage was less than 25% for the remainder of the year as of Q1, further increasing risk to the updated cost estimates. Despite these challenges, InvestingPro data shows Darden maintains a "Good" overall financial health score of 2.66, with particularly strong profit metrics. Investors seeking deeper analysis can access the comprehensive Pro Research Report, available for Darden and 1,400+ other US equities.
As a result of these adjustments, Mizuho lowered its fiscal 2026 earnings per share estimate for Darden to $10.48 from $10.65, compared to the consensus estimate of $10.62. The company currently trades at a P/E ratio of 18.75, which InvestingPro identifies as high relative to near-term earnings growth. Investors should note that Darden has maintained dividend payments for 31 consecutive years and has raised its dividend for 5 consecutive years, with the next earnings report scheduled for December 18.
In other recent news, Darden Restaurants has been the focus of various analyst updates following its recent financial results and investor meetings. Goldman Sachs upgraded Darden Restaurants from Neutral to Buy, citing an improved value proposition in casual dining, which has been driving share gains. This upgrade comes with a price target of $225.00, suggesting a potential 20% upside. UBS reiterated its Buy rating on the company, maintaining a positive outlook despite macroeconomic challenges, although it adjusted its price target to $230.00 due to margin pressures from increased labor and operating expenses.
Darden’s first-quarter results revealed strong sales momentum at key brands, but lower margins affected earnings. Despite these challenges, the company has raised its fiscal year 2026 sales guidance. Meanwhile, TD Cowen lowered its price target to $200.00, maintaining a Hold rating, and noted that Darden no longer benefits from easier year-over-year comparisons at its Olive Garden chain. The firm expressed surprise at the recent stock decline, attributing it to high expectations for Olive Garden and the stock’s relative resilience compared to the sector. These developments highlight the mixed reactions from analysts regarding Darden Restaurants’ current performance and future prospects.
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