CAVA Stock Forecast & Price Target

Cava Group Inc. is poised for positive financial performance, as evidenced by strong third-quarter same-store sales growth of 18.1% and significant traffic growth of 12.9%, which surpassed consensus estimates. The company's strategic decision to implement a muted pricing approach is enhancing customer value perceptions, further supporting traffic and sales momentum heading into 2025. Additionally, the successful revamp of their loyalty program has increased the sales mix through loyalty by 230 basis points, while upward revisions to consensus adjusted EBITDA estimates indicate confidence in sustained sales strength through fiscal years 2025 and 2026.

Cava Group's negative outlook is primarily driven by a reduction in restaurant-level margin estimates for 2025, which now stands at 25.3% compared to previous estimates of 25.6%, despite still exceeding the company's guidance. Additionally, the company faces significant pressures from macroeconomic conditions, including consumer spending slowdown and inflation, which may lead to higher input costs and diminishing traffic volumes. Execution challenges, coupled with the departure of key executives, further contribute to concerns regarding the company's capacity to meet its growth objectives and maintain profitability in a competitive market.