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Investing.com - UBS maintained its Buy rating and $220.00 price target on Texas Roadhouse (NASDAQ:TXRH) ahead of the restaurant chain’s second-quarter earnings report scheduled for August 7. According to InvestingPro data, the stock is currently trading near its Fair Value, with analyst targets ranging from $165 to $220.
The firm expects Texas Roadhouse maintained strong same-store sales momentum throughout the second quarter, with potential upside to consensus estimates, though UBS models a margin miss due to its cost of goods sold forecast. This aligns with the company’s recent performance, showing impressive revenue growth of 15.1% over the last twelve months, despite operating with gross profit margins of 18.6%.
Investor expectations for second-quarter same-store sales appear split, with many anticipating approximately 5.5-6% growth while others project 6-7%, according to UBS. Investors generally expect the company to increase its commodity cost inflation outlook to approximately 4-5% from the previous range of 3.5-4.5%. InvestingPro analysis reveals that 8 analysts have revised their earnings upward for the upcoming period, suggesting potential outperformance. Get access to 10+ additional exclusive ProTips and comprehensive financial metrics with InvestingPro.
UBS believes Texas Roadhouse is positioned for continued same-store sales momentum in the second half of 2024, which should support the stock price. The firm notes that third-quarter-to-date comparable sales trends will likely be the key metric of focus when earnings results are released.
The investment bank remains positive on Texas Roadhouse shares due to its leading traffic momentum, strong store growth outlook, and the likelihood of achieving long-term margins of 17-18% over time, despite potential near-term margin pressure from cost inflation.
In other recent news, Texas Roadhouse has been the focus of several analyst updates and company developments. Melius Research initiated coverage on Texas Roadhouse with a Buy rating and set a price target of $235, highlighting the company’s traffic-driven growth strategy and pricing discipline. Truist Securities also raised its price target for the company to $212, maintaining a Buy rating, despite the restaurant chain opening fewer new locations than expected in the second quarter of 2025. Meanwhile, JPMorgan adjusted its price target to $200, citing Texas Roadhouse’s strong customer value proposition and better-than-expected comparable sales growth of 3.5% in the first quarter of 2025.
In corporate news, Texas Roadhouse announced the departure of Chief Financial Officer Chris Monroe, who had been with the company for less than two years. Keith Humpich, Vice President of Finance, has been appointed as interim CFO. Additionally, the company held its Annual Meeting of Shareholders, where all director nominees were approved by a significant majority, and other key proposals were addressed. These developments come as Texas Roadhouse continues to navigate a competitive dining market, balancing high prime costs with strong annual unit volumes.
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