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Investing.com - Melius Research initiated coverage on Texas Roadhouse (NASDAQ:TXRH) with a Buy rating and a price target of $235.00 on Monday, representing a significant upside from the current trading price of $188.09. The stock has shown strong momentum, delivering a 13% return over the past year.
The research firm highlighted Texas Roadhouse’s traffic-driven growth strategy and pricing discipline, noting that the restaurant chain prioritizes guest value over margin maximization.
Melius pointed to the company’s strong unit economics, measured expansion approach, and culture-driven execution as factors making it "one of the most durable compounders in casual dining."
While the firm acknowledged that near-term beef costs are currently weighing on margins, it characterized these challenges as "cyclical noise in a structurally strong model."
Melius stated that the market currently underappreciates the brand’s long-term earnings power and stable growth potential.
In other recent news, Texas Roadhouse reported first-quarter 2025 revenues of $1.45 billion, surpassing consensus estimates of $1.44 billion. However, the company’s earnings per share of $1.70 fell short of the expected $1.76, and adjusted EBITDA was reported at $184 million, below the anticipated $189 million. The restaurant chain opened four new company-owned locations during the second quarter, which was less than the expected six new openings. Texas Roadhouse also plans to acquire three franchise locations, expanding its portfolio and focusing on growth in its Bubba’s brand. Truist Securities raised its price target for Texas Roadhouse to $212, maintaining a Buy rating, while JPMorgan increased its target to $200, retaining a Neutral rating. In leadership changes, CFO Chris Monroe left the company, with Keith Humpich stepping in as interim CFO. Shareholders recently approved the election of directors and ratified KPMG LLP as the company’s independent auditors. However, a proposal for disclosing the company’s Consolidated EEO-1 Report was not approved.
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