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On Monday, Stifel analysts reiterated a Buy rating and a $205.00 price target on shares of Darden Restaurants (NYSE:DRI), highlighting industry trends and the company’s performance. According to InvestingPro data, the company maintains a GOOD financial health score, though it’s currently trading above its Fair Value. The stock has delivered a solid 17% return over the past six months. According to Stifel, the restaurant industry saw a sluggish start to the year, with a notable dip in demand during February. However, recent mobile location data has shown an improvement in industry demand since those February lows, indicating that weather played a significant role in the earlier downturn. Despite industry challenges, Darden has maintained revenue growth of 5.14% over the last twelve months, with annual revenues reaching $11.58 billion.
Darden Restaurants, the parent company of popular chains such as Olive Garden and LongHorn Steakhouse, is expected to report mixed same-restaurant sales (SRS). LongHorn Steakhouse is anticipated to continue its strong performance with a solid momentum around 5%, while Olive Garden is expected to post modestly positive results.
Despite the positive aspects of Darden’s performance, Stifel analysts expressed concerns regarding the potential impact of weakening consumer confidence on the company. This could potentially offset the benefits of various initiatives that Darden has been implementing, such as Olive Garden’s partnership with Uber (NYSE:UBER) Direct for delivery and limited-time offers (LTOs), which are designed to attract customers and drive sales.
The analysts’ commentary underscores the delicate balance that Darden Restaurants must maintain in navigating industry-wide challenges while pursuing growth through strategic initiatives. The company’s ability to sustain momentum at LongHorn Steakhouse and achieve positive results at Olive Garden will be key factors to watch as it aims to meet the expectations set by the maintained price target. With earnings scheduled for March 20th, investors should note that Darden has maintained dividend payments for 31 consecutive years, currently offering a 3.01% yield. For deeper insights into Darden’s financial health and growth prospects, check out the comprehensive research report available on InvestingPro.
In other recent news, Darden Restaurants has been the focus of several analyst evaluations and corporate developments. BMO Capital Markets recently raised its price target for Darden Restaurants from $165 to $175, following the company’s second-quarter earnings report for fiscal year 2025, which slightly exceeded the consensus estimate. The earnings per share (EPS) came in at $2.03, just above the expected $2.02, attributed to stronger comparable sales and reduced food costs. Meanwhile, KeyBanc Capital Markets maintained its Overweight rating on Darden, with a price target of $200, citing the strength of its major brands and the potential undervaluation compared to peers in the casual dining sector. KeyBanc adjusted its fiscal year 2025 EPS forecast to $9.44, slightly below the consensus, while projecting fiscal year 2026 EPS at $10.78.
Raymond (NSE:RYMD) James reaffirmed a Strong Buy rating on Darden, emphasizing the company’s strategic positioning for a potential recovery in fundamentals as it approaches 2025. Additionally, Darden announced the retirement of board member Nana Mensah, which was disclosed in a regulatory filing, with no immediate plans for a successor. The company expressed gratitude for Mensah’s contributions, ensuring stakeholders that this transition will not affect board governance. These developments reflect a period of strategic adjustments and evaluations for Darden Restaurants in the current economic landscape.
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