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Investing.com -- Evercore ISI reiterated its Outperform rating and $250 price target on Darden Restaurants (NYSE:DRI), saying the multi-brand restaurant operator remains well-positioned to deliver “long-term, sustainable double-digit total return.”
Analyst David Palmer said reinvestment at core brands like Olive Garden and LongHorn is expected to drive steady growth in same-store sales (SSS), even in a subdued industry environment.
The broker expects Olive Garden, which accounts for 45% of sales, to benefit from initiatives such as Uber (NYSE:UBER) Direct and lower-priced menu options. Combined with LongHorn, which makes up another 25%, these brands are seen achieving SSS of more than 4% in fiscal 2026 (FY26).
Darden’s broader strategy centers on affordability and labor investment, supporting Evercore’s forecast of mid-single-digit sales growth. For fiscal 2026, the firm projects 3.2% SSS growth and 2.5% unit expansion.
Although Evercore trimmed its FY26 EPS estimate by 1–2% due to reinvestment effects and now forecasts EBIT margin expansion of +35 basis points instead of +50bps previously, it still sees the stock’s valuation as attractive.
“We maintain our price target of $250 equating to ~21x FY27e EPS which is near the high end of its 5-year next twelve months (NTM) range 15-22x,” the note said.
Annual targets have been reset with a focus on “sustainable sales growth,” including 3–4% unit growth and 1.5–3.5% SSS growth. The analysts continue to model total shareholder return of 10–15%, with FY26 and FY27 estimates still above consensus.
The midpoint of the SSS forecast tops the 2.64% analyst consensus from LSEG.
Darden Restaurants projected annual same-store sales growth between 2% and 3.5%, with the midpoint topping the 2.64% analyst consensus from LSEG, following better-than-expected quarterly results on Friday.
The company also unveiled a new $1 billion share buyback program and said it is reviewing strategic options for its Bahama Breeze chain.
For the fiscal fourth quarter, Darden reported a 4.6% rise in consolidated same-store sales from the prior year, driven by a 6.9% increase at Olive Garden.