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Investing.com - Truist Securities lowered its price target on Darden Restaurants (NYSE:DRI) to $240.00 from $252.00 on Friday, while maintaining a Buy rating on the restaurant chain operator. The stock, which has declined 9.35% over the past week, currently trades at $192.74 and appears slightly undervalued according to InvestingPro Fair Value estimates.
The price target reduction follows Darden’s first-quarter fiscal 2026 results, which missed same-store sales and earnings per share expectations. Despite the downward revision, the new target still represents significant upside potential for the stock. The company maintains strong fundamentals with a "GOOD" financial health score and has consistently maintained dividend payments for 31 consecutive years.
Truist highlighted Darden’s decision to increase its fiscal year 2026 sales guidance amid an uncertain macroeconomic environment, pointing to Olive Garden’s strong market positioning and several incremental sales drivers. These include growing delivery sales, effective promotional campaigns, and ongoing tests of a small portion menu.
The firm noted that rising beef costs are currently pressuring Darden’s profit margins, though the company has maintained its earnings per share guidance for fiscal 2026. Modest menu price increases and improved labor productivity are helping to drive slight margin expansion despite the cost pressures.
Truist analysts expressed the view that after the current spike, beef prices are more likely to surprise to the downside than continue rising, which could potentially drive earnings higher than current expectations.
In other recent news, Darden Restaurants reported its fiscal first-quarter 2026 results, revealing adjusted earnings per share of $1.97, slightly below the consensus expectation of $2.01. The company achieved sales of $3.045 billion, aligning with forecasts, though restaurant margins were softer at 18.7% compared to the anticipated 19.2%. Following these results, KeyBanc lowered its price target for Darden Restaurants to $225 due to concerns over margins, while maintaining an Overweight rating. UBS reiterated its Buy rating with a $245 price target, citing solid sales growth despite the earnings miss. Bernstein also maintained an Outperform rating and a $230 price target, expressing confidence in Darden’s market share growth in the casual dining and steakhouse sectors. BMO Capital reduced its price target to $205, attributing the adjustment to lower margins and increased general and administrative expenses. Additionally, Darden’s board approved a $17 million equity award for CEO Ricardo Cardenas, set to be granted in September 2025. The performance stock units will vest in 2030, contingent on the company’s shareholder return relative to the S&P 500.
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