Stifel analyst Chris O’Cull lowered the firm’s price target on First Watch Restaurant (FWRG) to $17 from $18 and keeps a Hold rating on the shares. Despite weaker-than-anticipated Q1 comparable sales, First Watch maintained its full-year top-line guidance, but meaningfully reduced its EBITDA outlook due to cost pressures, the firm says. Stifel believes high comparable sales expectations heading into the earnings report, the size of the EBITDA guidance reduction, and a top-line outlook that appears aggressive were the primary reasons for the stock’s sharp pullback. While the firm was encouraged that dine-in traffic improved in April, it believes the company must prove that its marketing efforts can sustainably drive positive traffic without unduly impacting average check.
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