CAVA: Share Price Declines Will Present Buying Opportunity as Headwinds Subside

Analysts have reduced their price target for CAVA Group from approximately $83.56 to $67.89. They cite persistent macroeconomic pressures and softer consumer demand as key drivers of the lowered outlook.

Analyst Commentary

Analyst reactions to CAVA Group’s recent results and future prospects reflect a mix of optimism about the company’s growth potential and caution regarding near-term challenges. Many have adjusted price targets in light of updated guidance and macroeconomic trends, while maintaining a range of Neutral, Buy, and Outperform ratings.

Bullish Takeaways

• Bullish analysts highlight CAVA Group’s position as a leading brand in the fast-growing Mediterranean segment, suggesting continued unit expansion potential.
• There is optimism that recent share price declines have already factored in much of the bad news. This could present a buying opportunity as CAVA’s unit economics improve.
• Increased consumer adoption of Mediterranean cuisine and growing brand awareness are viewed as supportive factors for demand recovery over time.
• Some analysts expect that current headwinds affecting traffic and sales are likely to be temporary, and that normalized market conditions could unlock renewed growth.

Bearish Takeaways

• Bearish analysts point to disappointing same-store sales growth and weaker traffic, with soft consumer demand negatively impacting recent quarterly results and future outlooks.
• Ongoing macroeconomic pressures, including consumer pullback on discretionary spending, are expected to continue weighing on performance in the near term.
• There are concerns about increased volatility in CAVA’s sales trends, particularly into the fourth quarter, causing analysts to moderate their full-year and 2025 forecasts.
• While acknowledging the company’s upward trajectory, skeptics note that challenging comparisons and lackluster sector spending may limit upside until conditions stabilize.

What's in the News

• President Donald Trump is expected to reduce tariffs on beef, tomatoes, coffee, and bananas in an effort to lower grocery costs, a move that could impact CAVA Group along with other major food retailers and restaurants (Bloomberg).
• CAVA launched its first-ever digital merch store, The CAVA Shop, offering branded apparel and accessories for fans.
• The company updated its 2025 earnings guidance, lowering projected same-restaurant sales growth to 3.0% to 4.0% and profit margin expectations to 24.4% to 24.8%.
• CAVA continues its rapid expansion, with a new restaurant opening in Miami's Brickell neighborhood and ongoing national growth toward a goal of 1,000 locations by 2032.

Valuation Changes

• Consensus Analyst Price Target: Lowered from $83.56 to $67.89, reflecting a notable reduction in estimated fair value.
• Discount Rate: Decreased marginally from 8.42% to 8.42%, indicating little change in risk assumptions.
• Revenue Growth: Revised down slightly from 20.44% to 20.03%, pointing to somewhat more conservative sales growth expectations.
• Net Profit Margin: Lowered from 6.72% to 5.57%, signaling reduced expectations for profitability in future periods.
• Future P/E: Decreased from 100.46x to 95.25x, suggesting investors are assigning a somewhat lower premium to forward earnings.