CAVA's Traffic-Driven Growth, Price Discipline Is Better Than Broader Market: Analyst

B Of A Securities analyst Sara Senatore increased the price forecast for CAVA Group, Inc. (NYSE:CAVA) from $112 to $121 while reiterating a Buy rating.

On Friday, CAVA’s first-quarter revenue increased 28.2% year-over-year to $331.83 million, beating the consensus estimate of $326.88 million, and adjusted EPS of 22 cents, beating analyst estimates of 14 cents.

CAVA expects full-year same-restaurant sales (SSS) growth to be between 6% and 8%, unchanged from prior guidance.

Also Read: CAVA On Track With Ambitious Expansion Plans Of Having 1,000 Restaurants By 2032: Trump Tariff ‘Exposure Remains Limited,’ Says CEO

The analyst notes that first-quarter 2025 SSS growth of 10.8% modestly exceeded BofA’s estimate of 9.7% and the Visible Alpha consensus of 10.4%.

This makes it particularly noteworthy due to its traffic-driven nature (+7.5%) as CAVA maintained pricing discipline (~1.7% compared to the broader food-away-from-home Consumer Price Index (FAFH CPI) of 3.6%), adds the analyst.

Considering the headwinds from weather and LA fires, the analyst estimates the implied 3-year stacked SSS growth was 3-5+ percentage points ahead of CAVA’s high-30s guidance (reported additive stack was ~+41.5%, including weather impact).

The analyst believes CAVA’s FY25 SSS guidance is likely conservative, citing the strong performance of recent menu innovations and advertising, along with upcoming catalysts such as menu news (chicken shawarma testing in Dallas, Texas and Western Florida) and the loyalty program.

The analyst maintained the FY25 SSS growth estimate at 7.4%, with stronger traffic growth (+5.2% versus +3.5% previously) offset by a lower mix (+0.5% versus +1.8% previously).

Senatore estimates FY25 Restaurant Level Margin (RLM) of 25.3% and has raised pre-opening costs estimates to $15.2 million from $13.3 million previously, reflecting the new guidance for faster unit growth. As a result, the analyst revised FY25 EPS estimates to 58 cents from 61 cents previously.

Last week, TD Cowen analyst Andrew M. Charles reiterated a Buy rating and maintained a $120 price forecast on the stock.

He noted the company’s unique advantage from organic brand discovery and meaningful sales catalysts. He sees potential upside to 2025 SSS and adjusted EBITDA guidance, maintains estimates, and a “Top Pick” rating.

Price Action: CAVA shares are trading lower by 4.65% to $92.30 at last check Monday.

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