Restaurant Chain Cava Is 'Positioned To Sustain Positive Transaction Growth,' Analyst Says

Zinger Key Points
  • With improved near-and medium-term visibility, Wedbush says current 2024 and 2025 and EBITDA expectations are conservative.
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On Tuesday, CAVA Group Inc. CAVA reported that first-quarter revenue increased 30.3% year over year to $256.3 million, beating the consensus estimate of $245.94 million.

The Mediterranean fast-casual restaurant chain company reported quarterly earnings of $0.12, which beat analyst estimates of $0.05.

Wedbush maintains Cava Group with an Outperform rating and raised the price target from $74 to $90.

Related: Cava Group In The Sweet Spot? CEO Sees Consumers Trading Down From Casual Dining, Trading Up From Fast Food: ‘We Don’t Think It’s An Either Or’

The analyst writes, “We view CAVA as one of a handful of publicly traded restaurants positioned to deliver positive annual transaction growth over the longer term, with realistic long-term revenue and unit growth targets.”

With improved near-and medium-term visibility, Wedbush says current 2024 and 2025 and EBITDA expectations are conservative.

The maturation cycle of new units, CAVA’s attractive value proposition, growth in advertising, menu innovation, growth in digital, a new loyalty program, and throughput-focused operational initiatives are drivers of SSS growth in the near-to-medium-term.

Wedbush increased the second quarter same-store-sales (SSS) growth estimate to 6.0% from 5.0% and the 2024 SSS growth estimate to 6.3% from 5.3%.

Wedbush says, “Given our belief that CAVA is positioned to sustain positive transaction growth and to gain transaction share over the longer term, even relative to growth peers, we believe such a premium is justifiable.”

Price Action: CAVA shares are up 5.95% at $87.30 at the last check on Wednesday.

Photo via Shutterstock

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