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Investing.com - Dutch Bros (NYSE:BROS) has been named the top pick in the U.S. restaurant sector by Mizuho Securities, followed by pizza delivery giant Domino’s Pizza (NYSE:DPZ) and chicken wing specialist Wingstop (NASDAQ:WING).
Analysts at the brokerage including Nick Setyan initiated coverage on 18 restaurant stocks, giving Dutch Bros a $70 price target with an "outperform" rating. The firm cited the coffee chain’s "clear strategy to drive traffic share, low risk to unit growth expectations," and "overly conservative" 2026 estimates as key factors behind the recommendation.
The U.S. restaurant industry is currently navigating what Mizuho describes as a "hyper-value environment," with restaurants engaged in an escalating price war to combat traffic share lost to grocery and convenience stores. Post-pandemic restaurant price increases have resulted in a 10% traffic share shift from restaurants to grocery and convenience stores, they noted.
Pizza quick-service restaurants and casual diners are best positioned for traffic and margin outperformance in the current environment, according to Mizuho. Domino’s Pizza received a $500 price target, with analysts saying the company took a "margin hit early by maintaining check growth below inflation" and is now "poised for same-store sales growth, margin expansion, and unit growth acceleration."
Mizuho rated burger chain Wendy’s (NASDAQ:WEN) as "underperform" with an $8 price target, stating the company "lacks a value strategy, is in the midst of a CEO transition," and faces increasing probability of "an exit from the breakfast daypart," creating risk to second-half 2025 and 2026 same-store sales growth and margin expectations.
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