What's Going On With Cava Shares Wednesday?

Zinger Key Points

Cava reports second quarter sales of $278.24 million, missing estimates but rising 20.3% year-over-year.
The company posts adjusted earnings of 16 cents per share, topping expectations, as restaurant-level profit, adjusted EBITDA both increase.
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CAVA Group, Inc. CAVA shares are trading lower after the company reported worse-than-expected second-quarter sales results.

CAVA is taking a hit from negative sentiment. Review the technical setup here.

What To Know: Cava reported sales of $278.24 million, missing the consensus estimate of $286.58 million, but still up 20.3% year-over-year, driven by 75 net new restaurant openings since the second quarter of 2024 and same-restaurant sales growth of 2.1%.

In addition, the company reported adjusted earnings per share of 16 cents, beating the consensus estimate of 14 cents. Cava opened 16 net new restaurants during the quarter, bringing its total to 398 locations — up 16.7% from a year ago — with average unit volume rising to $2.9 million from $2.7 million in the prior-year period.

Restaurant-level profit climbed 19.6% to $73.3 million, with a margin of 26.3%, slightly below last year's 26.5% due to higher costs tied to the grilled steak launch and wage investments. Adjusted EBITDA rose 22.6% to $42.1 million, driven by strong new restaurant performance, operational improvements, and expense leverage.

Net income totaled $18.4 million compared to $19.7 million last year, while adjusted net income increased from $16.8 million.

FY25 Outlook: Cava sees new restaurant openings from 68 to 70, along with restaurant-level profit margin from 24.8% to 25.2%.

Analyst Changes: Following the earnings report, multiple analysts issued price target adjustments.

BofA Securities analyst Sara Senatore maintained a Buy rating on Cava and lowered the price target from $121 to $100.
Piper Sandler analyst Brian Mullan maintained an Overweight rating on Cava and lowered the price target from $122 to $100.
Citigroup analyst Jon Tower maintained a Neutral rating on Cava and lowered the price target from $102 to $88.
Morgan Stanley analyst Brian Harbour maintained an Equal-Weight rating on Cava and lowered the price target from $107 to $97.
Barclays analyst Jeffrey Bernstein maintained an Equal-Weight rating on Cava and lowered the price target from $91 to $74.