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Loop Capital adjusted its outlook on CAVA Group Inc (NYSE:CAVA), increasing the price target to $122 from the previous $80 while maintaining a Hold rating on the stock. The revised target comes after CAVA reported a significant earnings beat in its second quarter of 2024.
CAVA Group announced an adjusted EBITDA of $34.3 million for the second quarter of 2024, which was a substantial increase from $21.6 million reported in the same quarter the previous year. The figure also exceeded Loop Capital's estimate of $26.6 million and the consensus estimate of $29.6 million.
The company's earnings per share (EPS) for the quarter were reported at $0.17, surpassing both the forecast of $0.09 and the consensus of $0.13.
The restaurant chain also posted robust comparable sales growth of 14.4% for the quarter, including a 4.9% increase in ticket size and a 9.5% rise in traffic. These numbers outperformed Loop Capital's growth forecast of 6.0% and the consensus projection of a 7.4% increase.
CAVA's consolidated revenues for the second quarter stood at $231 million, marking a 35% year-over-year increase. This performance comfortably beat both the firm's estimate of $205 million and the consensus of $220 million.
Loop Capital's decision to maintain the Hold rating while raising the price target to $122 is based on approximately 110 times their revised 2025 enterprise value/EBITDA estimate.
CAVA Group has reported a robust Q2 2024 performance, with revenue surging by 35.2% to $231.4 million. This growth was driven by a 14.4% rise in same-restaurant sales and the opening of 18 new restaurants.
TD Cowen also lifted its stock target for the company from $95 to $115, based on strong 2Q results and increased EBITDA estimates for 2024 and 2025.
Despite the positive news, both JPMorgan and Citi have maintained a neutral rating on the stock, indicating a cautious stance. CAVA Group plans to continue its growth trajectory with the opening of 54 to 57 new restaurants by the end of 2024 and expects same-restaurant sales growth to be between 8.5% and 9.5%.
InvestingPro Insights
Following Loop Capital's updated outlook on CAVA Group Inc, InvestingPro's real-time data and analytics provide additional context that may be valuable for investors considering the company's current position. With a market capitalization of $13.95 billion and a staggering P/E ratio of 324.76, CAVA's valuation reflects high investor expectations for future growth. The company's revenue growth is impressive, with a 31.01% increase over the last twelve months as of Q2 2024, indicating a strong upward trend in sales.
InvestingPro Tips suggest that analysts are optimistic about CAVA's future, expecting net income and sales growth this year. Additionally, three analysts have revised their earnings estimates upwards for the upcoming period, further signaling confidence in the company's financial trajectory. However, an InvestingPro Tip also indicates that the stock may be in overbought territory, as suggested by the Relative Strength Index (RSI), which could imply some caution for short-term investors.
Investors seeking more in-depth analysis can find a total of 19 additional InvestingPro Tips at https://www.investing.com/pro/CAVA, offering a comprehensive look at CAVA's performance metrics and investment potential. With CAVA trading near its 52-week high and registering strong returns over various timeframes, these insights can help investors make informed decisions aligned with their investment strategies.
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