On Friday, Stifel analysts increased the price target for Darden Restaurants (NYSE:DRI) shares to $215 from $205, while maintaining a Buy rating on the stock. The adjustment follows Darden’s third-quarter earnings report, which met expectations with earnings of $2.80 per share, despite softer-than-anticipated comparable sales at its Olive Garden and LongHorn Steakhouse chains. The company managed to balance lower-than-projected revenue with reduced general and administrative (G&A) as well as marketing expenses.
Darden Restaurants has not observed any significant shifts in consumer dining habits, despite a downturn in broader consumer sentiment. With revenue growth of 5% in the last twelve months and a healthy gross profit margin of 21.55%, the company continues to demonstrate financial resilience. This observation is supported by strong quarter-to-date comparable sales trends, which indicate a potential 3% increase in consolidated same-restaurant sales (SRS) for the fourth quarter. The company’s ongoing implementation of the Uber (NYSE:UBER) Direct delivery service at Olive Garden is also seen as a positive development, expected to drive substantial comparable sales benefits in the upcoming quarters. InvestingPro data reveals that Darden has maintained dividend payments for 31 consecutive years, with a current dividend yield of 2.81%.
Stifel’s analysts have maintained their fourth-quarter earnings per share (EPS) estimate for Darden at $2.88. This decision is based on a higher SRS projection being offset by the anticipated impact of rising inflation in the fourth quarter. However, the firm has increased its fiscal year 2026 EPS estimate for Darden to $10.45, taking into account a more cautious outlook on consumer spending. With analyst targets ranging from $145 to $235 and 10 analysts revising their earnings estimates upward, InvestingPro offers additional valuable insights through its comprehensive Pro Research Report, available along with over 1,400 other detailed company analyses.
In other recent news, Darden Restaurants reported its third-quarter fiscal 2025 earnings, revealing an EPS of $2.80 and revenue of $3.2 billion, both slightly below expectations. Despite the minor shortfall, investor confidence remained strong, as evidenced by a 7.5% rise in the company’s stock. The company also provided optimistic guidance for the fourth quarter, projecting sales between $3.23 billion and $3.26 billion, surpassing analyst expectations. Analysts from BTIG, TD Cowen, Jefferies, and Citi have adjusted their price targets for Darden Restaurants, reflecting varying levels of confidence in the company’s growth strategies. BTIG raised its target to $210, citing potential market share growth from strategic partnerships like the one with Uber Direct. TD Cowen increased its target to $190, noting a Hold rating due to premium valuation concerns. Jefferies, maintaining an Underperform rating, raised its target to $165, expressing caution over valuation and macroeconomic conditions. Meanwhile, Citi showed a more optimistic stance, raising its target to $229, highlighting Darden’s strong results and market positioning. These developments underscore the diverse perspectives on Darden’s potential, with analysts closely monitoring its strategic initiatives and market performance.
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