Darden Restaurants, the Consumer Cyclical sector company, was revisited by a Wall Street analyst yesterday. Analyst Zachary Fadem from Wells Fargo maintained a Hold rating on the stock and has a $200.00 price target.
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Zachary Fadem has given his Hold rating due to a combination of factors surrounding Darden Restaurants’ current performance and valuation. He acknowledges that Darden delivered stronger-than-expected same-store sales, benefited from successful initiatives such as first-party delivery and value-focused efforts, and managed to maintain its full-year EPS guidance despite significant commodity inflation, particularly in beef. However, he also points out that mix-related headwinds are emerging from actions like portion changes, and that management’s strategy of keeping menu price increases below inflation is likely to keep pressure on restaurant-level margins. In addition, he views Darden’s current valuation at roughly 18x earnings as already reflecting much of this execution strength, leaving less room for multiple expansion.
At the same time, Fadem notes that while top-line growth remains healthy and FY26 guidance was reiterated with stronger sales expectations and unit growth, this outlook assumes better earnings growth coming alongside lower margins, indicating a less favorable trade-off between growth and profitability. He highlights continued commodity and labor cost inflation, especially in beef in the near term, as additional constraints on margin improvement despite some relief expected later in the year. Given these dynamics, he believes there are more attractive risk/reward opportunities in other casual dining names, such as Brinker and Texas Roadhouse, which in his view offer greater upside leverage into 2026. As a result, he concludes that Darden’s shares are appropriately priced for now, supporting a Hold rather than a more bullish rating.
In another report released yesterday, TD Cowen also maintained a Hold rating on the stock with a $200.00 price target.
DRI’s price has also changed moderately for the past six months – from $222.750 to $192.880, which is a -13.41% drop .