Cava stock reversed its early gains Wednesday stock market action after the June IPO reported its first quarterly earnings as a public company. The fast-casual Mediterranean restaurant chain blew past estimates amid sizzling same-store sales growth.
Cava reported earnings per share of 21 cents vs. forecasts of a 3-cent loss. Cava revenue grew 27% to $172.9 million, nearly $10 million ahead of estimates. Excluding the winding down of its Zoes Kitchen brand, revenue growth was 62%.
Growth was fueled by 18.2% same-restaurant sales growth, plus a 43% increase in total Cava Restaurants. The company added 16 restaurants in the quarter and 84 from a year ago, for a total of 279.
Cava said it expects to open 65 to 70 new restaurants in 2023. It also offered guidance of same-store sales growth of 13% to 15% and adjusted EBITDA of $62 million to $67 million.
Stifel analyst Chris O'Cull hiked his price target to 55 from 48, keeping a buy rating, touting the unit-growth opportunity. Baird analyst David Tarantino lifted his target to 58 from 50, keeping an outperform rating.
However, Morgan Stanley analyst Brian Harbour only nudged up his price target for Cava stock to 45 from 43. He kept an equal weight rating, based on a view that outsized growth is already priced into the shares.
CAVA Stock
Cava stock gapped up, opening above 50, but then reversed to a 1.3% decline to trade around 45.80. The stock has given up all of the 21% gain that followed a breakout from an IPO base in July.
Cava finished Tuesday holding 110% above its June 15 initial offering price. Shares are volatile, typical for an IPO, but presenting a flighty target while the market's uptrend remains under pressure.
The Retail-Restaurants industry group has underperformed the market since early May, but could be seeing new life. The July retail sales report out Tuesday showed sales at restaurants and bars grew 1.4% on the month, second only to online sales.
However, Brinker International, which operates Chili's and Maggiano's, fell 4% on Wednesday morning, despite posting fiscal Q4 EPS of $1.39, up 21% from a year ago and 7 cents ahead of estimates. Revenue was a tad light, growing 5% to $1.08 billion.
