Darden Restaurants' Portfolio Is Better Positioned Than Most, Says This Analyst

Darden Restaurants' Portfolio Is Better Positioned Than Most, Says This Analyst
  • KeyBanc analyst Eric Gonzalez reiterated an Overweight rating on the shares of Darden Restaurants Inc DRI and raised the price target to $150 from $136.
  • The analyst believes the company's portfolio is better positioned than most, having preserved affordability and leaned heavily into productivity over the last two years.
  • Gonzalez added that Darden's scale, data insights, strategic planning, and results-oriented culture should enable it to outperform through various economic cycles.
  • Also ReadDarden Restaurants Reports Q1 Revenue Below Street View; Backs FY23 Outlook
  • The return of Darden's Never-Ending Pasta Bowl (NEPB) at Olive Garden is intended to be a natural progression of the company's messaging, which initially highlighted the Never-Ending first course and, more recently, its sauces.
  • NEPB, Gonzalez says, is the evolution of this campaign and is being executed during the seasonally low-volume period allowing the brand to keep its restaurants fully staffed as it approaches the higher-volume holiday periods.
  • He cited that the pandemic allowed Olive Garden to shed less profitable guests and reinvest in its food/service to create a more sustainable competitive advantage.
  • By underpricing the inflation curve as costs surged, Olive Garden should be less likely to revert to pre-pandemic habits even as its peers increasingly look to do so, noted the analyst.
  • Also SeeThis Type Of Restaurant Is Thriving Right Now, Yet Olive Garden Struggles: Here's Why
  • Price Action: DRI shares are trading lower by 2.19% at $130.19 on the last check Thursday.
  • Photo Via Company

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