Can a restaurant’s value rise because they add steak to the menu? At the start of this week, Cava Group (CAVA) launched a new grilled steak dish, and analysts revised their stock price targets. But it wasn’t just because of the company’s tasty new dish—it was also due to its juicy first-quarter earnings report. Cava Group reported strong first-quarter earnings, with revenue surging 30% year-over-year to $256.3 million, beating Wall Street estimates of $246 million. Cava also raised its guidance for net new restaurant openings in 2024. The company plans to open between 50 and 54 new locations, a small rise from its estimated 48 to 52 openings earlier this year. And the grilled steak? Cava wanted to offer customers a unique yet accessible dish to add to its health-conscious menu.
Who Is Cava?
Cava opened its first Mediterranean fast-casual restaurant in 2011. The company acquired Zoe’s Kitchen in 2018, a 250-location chain, which enabled Cava to expand into suburban areas. The company went public in June 2023. From its first-day close at $43.78, shares are now trading around $86.21. Its Mediterranean-style culinary brand focuses on healthy foods with fast-food convenience. In addition to its restaurants, Cava offers its line of Mediterranean spreads, dressings, and dips, sold in U.S. grocery stores. Cava’s restaurants offer customers health-conscious bowls and pita wraps, vibrant spreads and dips, and refreshing drinks, some of which are made in-house. And now, for beef lovers, steak is available alongside lamb, chicken, and vegetarian options. The company is also focused on AI technology initiatives to drive consistency and quality and boost accuracy and speed to enhance customer service.
A Higher Standard
Hungry yet? Analysts predict the company’s commitment to innovation will increase its sales and long-term growth. Nick Setyan at Wedbush kept his outperform rating, raising his price target from $74 to $90. Christine Dooley, an analyst at Argus, affirmed her buy rating and moved the price target from $70 to $105. She cited new store plans and the additional protein option. JP Morgan was more bearish, downgrading the stock from neutral to overweight, maintaining its price target at $77. However, consensus recommendations from a dozen investment firms, including analysts from Piper Sandler and Raymond James, have CAVA as a Strong Buy with an average 12-month price target of $87.15.
Neither Julie Stoller nor Stocks.News has positions in the stocks mentioned in this article. Please see our disclosure page for more information.
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Contributing Writer
As a professional writer since 2012, Julie Stoller has covered many industries, from healthcare and technology to consumer products and industrials. She has written about IPOs, spinoffs, ETFs, stock splits, commodities, legislative actions impacting investors, and macroeconomic issues. While keeping up with the latest meme stocks and trends, Julie's special interests are discovering ...