Zachary Fadem, an analyst from Wells Fargo, maintained the Hold rating on Texas Roadhouse (TXRH – Research Report). The associated price target is $175.00.
Zachary Fadem has given his Hold rating due to a combination of factors influencing Texas Roadhouse’s current financial performance and market position. Despite a strong start to the second quarter and a notable recovery in sales trends, ongoing inflationary pressures and challenges in restaurant-level margins (RLMs) are expected to limit potential upward revisions in earnings. The company’s price-to-earnings ratio has returned to historical levels, suggesting limited room for further stock price appreciation.
Moreover, while Texas Roadhouse has shown resilience by overcoming initial headwinds and achieving record sales in March, the impact of commodity inflation and labor cost increases continues to weigh on profit margins. Although there is optimism for gradual improvement in the latter half of the year, the risk-reward balance at the current valuation appears to be even, prompting a cautious stance. These elements collectively contribute to the Hold rating, reflecting a balanced outlook on the stock’s potential performance.
In another report released yesterday, Stifel Nicolaus also maintained a Hold rating on the stock with a $180.00 price target.