On Friday, BTIG analyst Peter Saleh increased the price target for Darden Restaurants (NYSE:DRI) stock to $210 from the previous $205, while reaffirming a Buy rating. The adjustment comes in response to the company’s recent earnings report and sales performance. The stock, currently trading near its 52-week high of $203.47, has delivered an impressive 26.24% return over the past year. According to InvestingPro data, 10 analysts have recently revised their earnings estimates upward for the upcoming period.
Saleh noted that although Darden’s same-store sales for the quarter did not meet expectations, the market had already anticipated this due to the broader industry commentary over the past two months. However, he expressed optimism about the company’s significant same-store sales acceleration in March, which suggests a strong conclusion to the fiscal year. The company, now valued at $23.31 billion, has maintained a solid 5% revenue growth and healthy profit margins, as revealed in InvestingPro’s comprehensive financial analysis.
The analyst highlighted the potential impact of Darden’s marketing and partnership strategies, such as the BuyOne, Get One promotion and the new delivery partnership with Uber (NYSE:UBER) Direct at Olive Garden. Saleh believes that these initiatives will contribute to the company’s market share growth and provide a tailwind for comparable sales.
Saleh also pointed out that investors might be underestimating the benefits of the delivery partnership with Uber Direct. He expects the collaboration to attract incremental customers and convert those who previously opted for pickup, thus enhancing Darden’s sales.
Darden Restaurants, the parent company of popular chains such as Olive Garden and LongHorn Steakhouse, has been focusing on growth strategies and operational efficiencies to bolster its market position and financial performance. The company has maintained dividend payments for 31 consecutive years, currently offering a 2.81% yield. The revised price target reflects BTIG’s confidence in the company’s ability to capitalize on these initiatives and continue its upward trajectory. For deeper insights into Darden’s valuation and growth prospects, investors can access detailed analysis and additional ProTips through InvestingPro’s comprehensive research reports.
In other recent news, Darden Restaurants reported its third-quarter fiscal 2025 earnings, revealing an earnings per share (EPS) of $2.80 and revenue of $3.2 billion, both slightly below forecasts. Despite these minor shortfalls, the company experienced a 6.9% increase in EPS compared to the same quarter last year, with Olive Garden and LongHorn Steakhouse showing sales growth. Analysts have varied outlooks on Darden, with Citi raising its price target to $229, maintaining a Buy rating due to strong results and a positive outlook. Conversely, Jefferies raised its target to $165 but kept an Underperform rating, citing concerns about valuation and market conditions. TD Cowen also adjusted its price target to $190, maintaining a Hold rating, highlighting Darden’s initiatives to enhance performance at Olive Garden. The company’s strategic direction and growth prospects, including the acquisition of Chuy’s, have contributed to a 20.2% rise in sales in its "Other Business" segment. For the fourth quarter, Darden projects total sales between $3.23 billion and $3.26 billion, with same-restaurant sales growth expected to exceed 3%. Looking ahead to fiscal 2026, Darden plans to open 60-65 new restaurants, emphasizing significant capital expenditures for expansion and technology.
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