Sweetgreen stock price target cut to $33 at TD Cowen

On Thursday, TD Cowen’s research indicated a revised price target for Sweetgreen Inc (NYSE: SG), reducing it to $33 from the previous $45. Despite the adjustment, the firm maintains a Buy rating on the company’s shares. Currently trading at $22.88, the stock sits well below analysts’ target range of $26-$45. InvestingPro analysis indicates the stock is currently overvalued, with additional insights available through 12+ exclusive ProTips. The reassessment follows a significant slowdown in year-to-date traffic within the restaurant industry, which the analyst believes management has addressed by setting a conservative same-store sales (SSS) guidance of 1%-3%. This guidance is seen as not only achievable but also potentially surpassable with the aid of newly identified growth drivers.

Sweetgreen’s fourth-quarter adjusted EBITDA reported a loss of $0.6 million, falling short of both TD Cowen’s $0.3 million projection and the Consensus Metrix (CM) forecast of a $0.4 million loss. The company’s trailing twelve-month EBITDA stands at -$34.9 million, while revenue grew 21.7% to $669 million. The shortfall was attributed to a same-store sales increase of 4%, which was below the anticipated 6.0% by TD Cowen and 5.8% by CM. InvestingPro’s Financial Health Score of 2.06 (rated as ’FAIR’) provides deeper insights into the company’s operational efficiency. The actual sales were at the lower end of the 4%-8% range implied by previous guidance. This weaker performance was further reflected in restaurant-level margins, which came in at 17.4%, below the expected 18.1%. The margin was impacted by a 40 basis point labor cost increase and a 50 basis point rise in other operating expenses.

Despite these challenges, the analysis suggests that new store productivity remains strong, matching roughly 100% of the productivity of mature stores. This indicates that while Sweetgreen has faced some hurdles, its expansion strategy continues to show promise. The company’s stock price has seen a significant decline, with a -33.1% return over the past six months, though it maintains a strong current ratio of 2.59, indicating solid short-term liquidity. For comprehensive analysis of Sweetgreen’s financial health and growth prospects, investors can access the detailed Pro Research Report, available exclusively on InvestingPro.

In other recent news, Sweetgreen Inc. reported its fourth-quarter 2024 earnings, which did not meet analyst expectations. The company posted an earnings per share (EPS) of -$0.25, missing the forecasted -$0.20, and revenue came in at $160.9 million, slightly below the anticipated $163.4 million. Despite these results, Sweetgreen achieved a 15% increase in full-year sales, reaching $676.8 million, and marked its first full year of positive adjusted EBITDA at $18.7 million. Analysts at RBC Capital Markets responded by lowering the company’s stock price target from $45 to $30, citing that Sweetgreen’s 2025 guidance fell short of market expectations. RBC Capital noted that while fourth-quarter revenue aligned with projections, same-store sales were below expectations. The company plans to counterbalance these challenges by enhancing menu offerings, launching a new loyalty program, and increasing marketing efforts. Sweetgreen’s management remains committed to expanding its restaurant footprint, with plans to open at least 40 new locations in 2025.

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