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On Thursday, RBC Capital Markets adjusted its outlook on Sweetgreen Inc (NYSE:SG), reducing the price target from $45.00 to $30.00 while maintaining an Outperform rating on the stock. Currently trading at $22.92, between its 52-week range of $11.84 to $45.12, the stock appears overvalued according to InvestingPro analysis. The revision comes as Sweetgreen’s 2025 guidance fell short of market expectations. Analysts at RBC Capital noted that, although the fourth-quarter revenue aligned with projections, same-store sales (SSS) were 190 basis points below expectations. The company has achieved 21.7% revenue growth over the last twelve months, reaching $669 million. Additionally, the midpoint of the company’s 2025 SSS guidance was 210 basis points under the consensus. For deeper insights into Sweetgreen’s financial health and growth prospects, InvestingPro subscribers can access the comprehensive Pro Research Report, part of our coverage of 1,400+ US stocks.
The underwhelming performance in the first quarter was attributed to a combination of factors, including the impact of the Los Angeles fires, colder weather conditions, and the timing of holidays. Despite these setbacks, Sweetgreen’s management has reaffirmed its unit growth forecast, and In-Kitchen (IK) operations continue to show strong performance.
The company is also planning to enhance its menu offerings, introduce a loyalty program, and increase marketing efforts throughout the year, which are expected to contribute to accelerating comparable sales. These strategic initiatives are anticipated to counterbalance the near-term challenges faced by the company.
As a result of these factors, RBC Capital has adjusted its estimates and price target to reflect the short-term challenges Sweetgreen is experiencing. Nevertheless, the firm remains optimistic about the company’s long-term growth potential, underlined by its commitment to unit expansion and innovation strategies.
In other recent news, Sweetgreen Inc. announced its fourth-quarter 2024 earnings, which fell short of analyst expectations. The company reported an earnings per share (EPS) of -$0.25, missing the forecast of -$0.20, and achieved revenue of $160.9 million, slightly below the anticipated $163.4 million. Despite these results, Sweetgreen highlighted a 15% year-over-year increase in full-year sales, reaching $676.8 million, and celebrated its first full year of positive adjusted EBITDA at $18.7 million. Same-store sales showed growth, with a 4% increase in the fourth quarter and a 6% rise for the full year. Analyst firms have not specifically mentioned upgrades or downgrades in recent reports. The company plans to open at least 40 new restaurants in 2025, expecting revenue between $760 million and $780 million, alongside a projected same-store sales growth of 13%. Sweetgreen is also focusing on menu innovation and will launch a new loyalty program, SG Rewards, in April.
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