CAVA Group, Inc.: Strong Financial Performance and Growth Potential Drive Buy Rating

William Blair analyst Sharon Zackfia has reiterated their bullish stance on CAVA stock, giving a Buy rating yesterday.

Sharon Zackfia has given her Buy rating due to a combination of factors that highlight CAVA Group, Inc.’s strong financial performance and growth potential. The company’s first-quarter results exceeded expectations, with both revenue and adjusted EBITDA surpassing consensus estimates by about 2%, despite challenges such as inclement weather. This performance was driven by a healthy 10.8% increase in comparable sales, supported by traffic growth and an increase in average ticket size.
Additionally, CAVA demonstrated broad-based strength across various regions and customer segments, with no region falling below a trailing average unit volume of $2.6 million. The company’s ability to attract customers from lower income cohorts, who contributed significantly to growth, underscores its strong value proposition in a challenging macroeconomic environment. Furthermore, the expansion of CAVA units by 18% and the outperformance of new units on both top and bottom lines contributed to a robust 28% growth in total sales and a 35% increase in adjusted EBITDA, reinforcing the positive outlook for the company.

Zackfia covers the Consumer Cyclical sector, focusing on stocks such as Sweetgreen, OneSpaWorld Holdings, and El Pollo LoCo. According to TipRanks, Zackfia has an average return of 13.0% and a 55.90% success rate on recommended stocks.

In another report released yesterday, TD Cowen also maintained a Buy rating on the stock with a $120.00 price target.