Sweetgreen (NYSE:SG) stock is down about 8.5% in the pre-market session on Friday, February 24. The decline in SG stock followed the company’s disappointing fourth-quarter financial performance and 2023 outlook.
The restaurant chain operator focusing on healthy food posted a loss of $0.44 per share compared to the Street’s estimate of $0.40. Its revenue of $118.6 million increased 23% year-over-year but missed the analysts’ consensus estimate of $124.7 million.
It’s worth highlighting that historically the company witnessed lower volumes in Q4 compared to Q3 and Q2. Further, the extended holidays around Thanksgiving and Christmas in 2022 remained a drag.
As for 2023, Sweetgreen expects to report sales between $575 million to $595 million, significantly lower than Wall Street’s expectations of $628.9 million. Furthermore, its Q1 revenue guidance range of $124 million to $127 million also fell short of analysts’ estimate of $132.24 million.
Is Sweetgreen Making Money?
While Sweetgreen has managed to grow sales, the company has not been profitable. Sweetgreen’s management said during the Q4 conference call that the company is targeting to achieve profitability in 2024 through its focus on margin expansion and reduction of costs.
While management is taking measures to turn profitable, Cowen analyst Andrew Charles sees increased risk to Sweetgreen’s same-store sales and “organic path to profitability” due to the challenging macro environment. Charles downgraded SG stock to Hold and lowered his price target to $12 from $19.
Including Charles, three analysts maintain a Hold recommendation on SG stock. At the same time, two analysts recommend a Buy. Overall, Sweetgreen stock has a Moderate Buy consensus rating on TipRanks.
Analysts’ average price target of $12.80 implies 37.78% upside potential.
