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On Thursday, UBS analyst Dennis Geiger revised the price target on Sweetgreen Inc (NYSE: SG) shares, lowering it to $35 from the previous $45, while maintaining a Buy rating on the stock. Currently trading at $24.15, Sweetgreen’s stock has shown significant volatility, with analyst targets ranging from $26 to $45. According to InvestingPro data, the stock has declined about 28% year-to-date despite posting a remarkable 92% gain over the past year. Geiger’s assessment acknowledges near-term challenges that have affected Sweetgreen’s first-quarter-to-date (1QTD) performance, citing weather conditions and California wildfires as significant factors. Despite these setbacks, the analyst believes that Sweetgreen presents a compelling long-term growth narrative.
The company has experienced sluggish same-store sales (sss) trends in the early part of the quarter, with an expected decline of 3-5%. However, the situation appears to be improving sequentially through the first quarter. Sweetgreen’s guidance for 2025 anticipates a positive turnaround in sss, projecting an increase of 1-3%, which suggests a notable acceleration in the remaining quarters towards the anticipated rate of around 4%. InvestingPro analysis shows the company maintains a healthy current ratio of 2.59, indicating strong short-term liquidity, though profitability remains a challenge with negative EBITDA of $34.9 million in the last twelve months.
Sweetgreen’s growth strategy includes the targeted opening of at least 40 new locations in 2025, with approximately 20 of those being Infinite Kitchen (IK) units. Additionally, around 3-5 retrofits or relocations are planned, which would bring the total number of IK openings to at least 25. The IK concept has shown promising results, with margins approximately 800 basis points better than non-IK stores and a potential for significant average unit volume (AUV) upside.
Despite a roughly 30% decline in Sweetgreen’s share value year-to-date, Geiger expects improving same-store sales trends to contribute to a recovery in valuation. The analyst also highlights Sweetgreen’s long-term growth levers, such as store development, kitchen automation, menu innovation, and loyalty programs, as key factors that will support sustained sales and EBITDA growth in the years ahead. Based on InvestingPro’s Fair Value analysis, the stock appears overvalued at current levels. Subscribers can access 12 additional ProTips and a comprehensive analysis of Sweetgreen’s financial health, growth prospects, and valuation metrics in the Pro Research Report.
In other recent news, Sweetgreen Inc. reported its fourth-quarter 2024 earnings, which missed analyst expectations. The company posted an earnings per share (EPS) of -$0.25, falling short of the forecasted -$0.20, and generated revenue of $160.9 million, slightly below the anticipated $163.4 million. Despite these shortfalls, Sweetgreen achieved a 15% year-over-year increase in full-year sales, reaching $676.8 million, and reported its first full year of positive adjusted EBITDA at $18.7 million. Same-store sales grew by 4% in the fourth quarter and 6% for the year.
In other developments, both TD Cowen and RBC Capital Markets have revised their price targets for Sweetgreen. TD Cowen adjusted its target to $33 from $45 while maintaining a Buy rating, citing a slowdown in restaurant traffic and conservative sales guidance. RBC Capital reduced its target from $45 to $30, maintaining an Outperform rating, and noted that Sweetgreen’s 2025 guidance fell short of market expectations.
Additionally, Sweetgreen plans to open at least 40 new restaurants in 2025 and aims for revenue between $760 million and $780 million. The company is also focusing on menu innovation, including the introduction of Ripple Fries, and launching a new loyalty program, SG Rewards, in April. Despite some challenges, such as weather impacts and operational disruptions, Sweetgreen remains committed to its growth and innovation strategies.
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