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On Wednesday, Oppenheimer analysts maintained their positive stance on Cheesecake Factory (NASDAQ:CAKE) stock, reiterating an Outperform rating and a $65.00 price target. The optimism stems from a belief in the potential for the company to surpass its management’s financial guidance for 2025, which could lead to upward revisions in earnings per share (EPS) as the year progresses. According to InvestingPro data, the stock has already demonstrated strong momentum with a 52% return over the past year, while analyst targets currently range from $37 to $66.
Analysts at Oppenheimer upgraded Cheesecake Factory stock to Outperform from Perform on January 6, marking the first upgrade since the firm began covering the stock in 2011. Their analysis suggests that there is a path for the company to exceed its 2025 financial targets, which could result in positive EPS revisions throughout the year. With a market capitalization of $2.65 billion and annual revenue of $3.54 billion, the company shows promising fundamentals. InvestingPro subscribers can access 8 additional key insights about CAKE’s growth potential and financial health.
For the fourth quarter of 2024, whose results are expected on February 19, Oppenheimer anticipates an in-line quarter. However, they find the same-store sales (SSS) and margin outlook for 2025 particularly compelling. These factors, they believe, could prove powerful against conservative consensus forecasts. The company maintains a healthy gross profit margin of 41.8%, and according to InvestingPro’s analysis, its PEG ratio of 0.39 suggests the stock may be undervalued relative to its growth prospects.
The analysts also highlighted the company’s growth brands, such as North Italia and Flower Child, noting that these brands are often under-appreciated despite having healthy fundamentals. They also contribute to a projected 6-7% unit growth algorithm for the consolidated business model.
With Cheesecake Factory’s stock trading at 13.9 times forward price-to-earnings (P/E), Oppenheimer analysts see an attractive investment opportunity. They emphasize that the company’s growth prospects are not fully recognized by the market, presenting a favorable scenario for investors. The reiterated $65 price target reflects this confidence in Cheesecake Factory’s potential for growth and profitability.
In other recent news, Cheesecake Factory has been the focus of several financial firms’ attention. Citi has increased its price target for the company to $66, citing potential margin improvements and the company’s ability to uphold its fiscal year 2025 revenue guidance despite potential risks. Meanwhile, Raymond (NSE:RYMD) James has also raised its price target for Cheesecake Factory to $56, emphasizing the company’s strong performance and growth potential through its North Italia and Flower Child brands.
In addition to Citi and Raymond James, Stephens has increased its price target for Cheesecake Factory to $57, attributing this to the company’s stable traffic and strong position within the full-service restaurant sector. Lastly, Goldman Sachs has initiated coverage on Cheesecake Factory with a buy rating and a price target of $56, recognizing the company’s potential for growth through unit expansion and market share gains.
These are recent developments that highlight the positive outlook on Cheesecake Factory from multiple financial firms. Each firm’s analysis underscores different strengths of the company, from operational improvements and strategic initiatives to the potential of its growth vehicles and unit expansion strategy. Hence, these reports provide a broad perspective on the company’s recent performance and future prospects.
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