Andrew Charles, an analyst from TD Cowen, maintained the Buy rating on First Watch Restaurant Group. The associated price target remains the same with $21.00.
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Andrew Charles has given his Buy rating due to a combination of factors that highlight the strong performance and potential of First Watch Restaurant Group. The company exceeded expectations in the third quarter with same-store sales growth of 7.1%, surpassing both Andrew’s estimate of 5.0% and the consensus of 4.6%. This sales performance, coupled with an adjusted EBITDA of $34.1 million, which also beat estimates, indicates robust operational execution.
Additionally, the company’s restaurant-level margins benefited from favorable labor and cost of goods sold metrics, despite some offsetting operating expenses. The management’s strategic pricing actions and strong weekday breakfast sales further support the positive outlook. Moreover, the significant increase in third-party delivery sales suggests an effective adaptation to consumer trends, contributing to the overall sales growth. These factors collectively suggest that the stock is undervalued and has room for appreciation, justifying the Buy rating.
Charles covers the Consumer Cyclical sector, focusing on stocks such as McDonald’s, CAVA Group, Inc., and Starbucks. According to TipRanks, Charles has an average return of 6.6% and a 49.50% success rate on recommended stocks.
In another report released today, Barclays also maintained a Buy rating on the stock with a $21.00 price target.