William Blair starts Cava Group at Outperform on ‘rapid growth’

William Blair analyst Sharon Zackfia initiated coverage of Cava Group with an Outperform rating. The company has hit upon a winning formula with its customizable menu of bowls and pitas featuring bold Mediterranean flavors that can fit in any dietary preference, the analyst tells investors in a research note. The firm sees room for upside as Cava greenfield locations have historically generated 40%-plus year-two returns. It projects Cava will achieve 20% annual revenue growth through 2026 alongside a nearly nine-fold improvement in adjusted EBITDA relative to 2022 levels. Blair expects the company’s “rapid growth” will outpace downward valuation pressure and sees the potential for the stock to appreciate at a high-single-digit to low-double-digit pace annually over the next decade.