Raymond James maintains Darden stock Outperform with $210 target

On Thursday, Raymond (NSE:RYMD) James reiterated its Outperform rating and $210.00 price target for Darden Restaurants (NYSE:DRI) shares. According to InvestingPro data, the company maintains a "GOOD" overall financial health score, with particularly strong profitability metrics. The firm’s analyst, Brian Vaccaro, provided insights following the company’s third-quarter earnings report. Darden’s earnings per share (EPS) for the quarter aligned with expectations, primarily due to lower-than-anticipated comparable sales growth, which was slightly offset by reduced marketing and general and administrative expenses.

Darden’s Olive Garden (OG) comparable sales showed a slight underperformance against broader casual dining segment trends, although it outperformed most rivals, excluding Chili’s and Texas Roadhouse (NASDAQ:TXRH). Meanwhile, Longhorn Steakhouse’s comparable sales increased by 2.6%, indicating a narrowing performance gap compared to the segment trends. The company’s strong operational performance is reflected in its impressive 21.4% gross profit margin and consistent dividend payments, which it has maintained for 31 consecutive years.

The company’s updated guidance for fiscal year 2025 suggests that fourth-quarter EPS will be consistent with prior consensus. However, the guidance for comparable sales in the fourth quarter seems to be more optimistic than analysts’ expectations, projecting a 3.5-4.0% increase compared to the consensus of 2.5%. Vaccaro highlighted the importance of obtaining a more precise forecast for fourth-quarter comparable sales and additional details on quarter-to-date trends during the morning’s conference call. He noted that BlackBox casual dining data indicated an uptick in March following weaker trends in February.

Despite the in-line earnings report, Darden’s shares experienced a slight dip in pre-market trading on Thursday. The company’s performance and future expectations are closely monitored by investors as indicators of its positioning within the competitive casual dining market. With analyst targets ranging from $145 to $230 and a consensus recommendation of 2.07 (Buy), investors seeking deeper insights can access comprehensive analysis and additional ProTips through InvestingPro’s detailed research reports, available for over 1,400 US stocks.

In other recent news, Darden Restaurants reported a 6.2% increase in total sales, reaching $3.2 billion for its third fiscal quarter, attributed to a rise in same-restaurant sales and revenue from new acquisitions like Chuy’s. The company’s adjusted diluted net earnings per share increased to $2.80, marking a 6.9% growth. Darden also updated its financial outlook for the fiscal year 2025, projecting total sales of $12.1 billion and the opening of 50 to 55 new restaurants. In addition, Truist Securities raised its price target for Darden Restaurants to $212, maintaining a Buy rating, citing the company’s recent acceleration in same-store sales. Stifel analysts also maintained a Buy rating with a $205 target, noting the company’s strategic initiatives such as the partnership with Uber (NYSE:UBER) Direct for delivery. Meanwhile, KeyBanc Capital Markets kept an Overweight rating with a $200 price target, despite adjusting its earnings per share forecast downward due to potential shortfalls in the Olive Garden segment. The company initiated a pilot delivery program at Cheddar’s Scratch Kitchen in collaboration with Uber, following a successful rollout at Olive Garden. These recent developments highlight Darden’s continued efforts to expand its market presence and adapt to changing consumer demands.

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