Analyst Andrew Charles of TD Cowen maintained a Hold rating on First Watch Restaurant Group (FWRG – Research Report), with a price target of $21.00.
Andrew Charles has given his Hold rating due to a combination of factors impacting First Watch Restaurant Group. The company has shown signs of recovery with positive traffic trends in January and guidance suggesting stable to slightly positive traffic through 2025. This is supported by improvements in Florida and third-party delivery services, which had been challenges in 2024. Additionally, the company’s innovative marketing strategies, particularly in hyper-personalization, are promising without significantly affecting general and administrative leverage.
However, the Hold rating reflects caution due to ongoing commodity inflation, particularly in eggs, which affects the company’s 2025 adjusted EBITDA guidance. While there is potential for improvement in 2026 as inflationary pressures may ease, the current financial projections remain below consensus expectations. The company’s plan for net openings aligns with market expectations, but the high commodity inflation presents a notable challenge for the upcoming year, warranting a cautious outlook.