By Dhirendra Tripathi
Investing.com – Darden Restaurants stock (NYSE:DRI) traded 1.9% higher Wednesday after Stifel said that Gene Lee’s successor Rick Cardenas has greatly influenced the fine-dining chain’s direction in recent years and will continue the strategic growth path the outgoing CEO led it on.
Analyst Chris O'Cull upgraded the stock to ‘buy’ with a target of $165, over 13% higher than the current price of $145.40.
Lee served as CEO for the last seven years, and will give way to Cardenas in May while staying on as chairman. Cardenas is currently the company’s President and Chief Operating Officer.
The company had announced the succession plan on December 17, along with its second-quarter results. The stock lost 5% that day; Stifel believes the fall wasn’t warranted given that the recent numbers were strong. The brokerage said Friday’s decline in the stock price might have been due to the announcement of the CEO’s departure. "we are confident investors will quickly realize his successor, Rick Cardenas, can continue to guide the company on a similar strategic growth path," O'Cull wrote in his report.
The report also pointed out that, " Darden continues to report solid results, and we believe the company is well-positioned to outperform peers in a challenging operating environment. We acknowledge variant-related sales disruptions are a near-term risk, but we argue shares trading at ~17x our FY23 earnings estimate represents an attractive entry point for a high-quality company."
Darden shares are up 22% for the year as of today's trading.