Why CAVA Group Stock Is Falling Today

CAVA Group, Inc. CAVA shares are trading lower on Wednesday. The firm reported financial results for the second quarter after the market close on Tuesday, with total revenues of $278.25 million, missing the consensus estimate of $286.58 million.

The company reported second-quarter adjusted earnings of 16 cents per share, beating analyst estimates of 14 cents per share.

CAVA Group is a fast-casual restaurant company that owns and operates the CAVA restaurant chain, known for its Mediterranean-inspired food. They also produce and sell a line of Mediterranean dips, spreads, and dressings in grocery stores.

Also Read: Chipotle Vs. Sweetgreen Vs. Cava: Who's Winning The Bowl Battle?

Here are the key analysts' takes on the stock:

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Bank Of America Securities

BofA Securities analyst Sara Senatore reiterated the Buy rating on the stock, lowering the price forecast from $121 to $100.

The analyst mentioned that although the boost to comps from store maturation has eased, new unit volume remains strong across diverse markets.

The analyst said they cut their fiscal year 2025 same-store-sales (SSS) growth forecast to 4.2% from 7.3% on slower traffic growth, trimming revenue slightly.

KeyBanc Capital Markets

Analyst Christopher Carril reiterated the Overweight rating on the stock, reducing the price forecast from $100 to $85.

Carril's Overweight rating reflects slower same-store-sales (SSS) growth in the second half. The rating cites the firm's solid growth story, best-in-class new unit returns, significant whitespace, latent pricing power, and category-leading position as supporting a premium valuation.

The company indicated that SSS trends exiting the second quarter and into the start of the third were running ahead of the 2.1% posted in the second quarter.

Management also highlighted the firm's strong profitability during the period, with restaurant margins of 26.3% surpassing consensus expectations and G&A expenses coming in lower than anticipated.

Supported by this solid expense control and operational efficiency, Carril writes that the company was able to reaffirm its full-year EBITDA guidance range of $152 million to $159 million.

The analyst's 2025 and 2026 EBITDA forecasts are $154.6 million (+22% year over year) and $194.4 million (+26% year over year), respectively, versus consensus estimates of $159.5 million and $203.5 million.

Stifel

Analyst Chris O'Cull said that while same-store-sales growth of 2.1% missed Stifel's 5.5% and the Street's 6.3% forecasts, it doesn't justify a $2 billion market value drop.

The analyst noted CAVA still beat EBITDA estimates, with new stores ramping ahead of schedule, creating a "honeymoon effect" that moderates comp impact but remains positive.

He attributed second-quarter softness mainly to lapping last year's steak launch, with quarter-to-date trends improving, and said CAVA's growing scale and untapped marketing could drive comps.

O'Cull views the weakness as temporary, not a shift in the company's fundamentals.

Assuming the 2025 class declines 5%, the 2024 class is flat, and all other comp stores rise 5% in 2026, the analyst estimates an average SRS headwind of about 150 bps.

TD Cowen

Analyst Andrew M. Charles reiterated the Buy rating on the stock, lowering the price forecast from $120 to $90.

Charles said the new store's sales strength shows the concept's growing portability. Despite softer sales, they are keeping the 2025–26 estimated adjusted EBITDA intact.

However, he cautioned that shares may remain under pressure until the new store sales maturation path is clearer.

The analyst stated that while the concept faces some risk from Gen Z's economic headwinds, they were encouraged by comments that trends improved in the second quarter and in July. This indicates that the third quarter is tracking at about 3% same-store sales ahead of the September 8 chicken shawarma launch and other initiatives to boost traffic.

Price Action: CAVA shares are trading lower by 16.54% to $70.52 at last check Wednesday.

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