Cava Stock Outlook: “Attractive Return Profile”, Near-Term Headwinds

Cava Group's stock (CAVA) has given holders a tough time this year, with CAVA having dropped 45.42% since the start of the year. This followed on from a 2024 that had offered up gains of 167%, as sentiment shifted dramatically. 

Coverage from Goldman Sachs today paints a picture of both robust long-term potential and near-term challenges. While the company's growth prospects are seen as promising, this is being weighed against economic uncertainties and evolving consumer behavior.

Goldman Sachs initiated coverage of Cava with a Neutral rating and a $74 price target, suggesting a 17% upside. The firm acknowledged Cava's “robust” long-term growth potential, driven by market share gains and an “attractive” return profile.

However, Goldman also cautioned about near-term uncertainties in same-store sales growth due to difficult comparisons and a tougher macroeconomic environment. This led to a recommendation for investors to seek a more favorable entry point.

Other analysts on the street have had mixed views following recent earnings reports, highlighting the divided sentiment.

Wedbush maintained an Outperform rating, raising the price target to $90, citing the potential for positive annual transaction growth and realistic long-term revenue and unit growth targets. Argus also affirmed a Buy rating, increasing its price target to $105. JP Morgan, while maintaining a Neutral rating, increased its price target to $90, highlighting Cava's multi-regional success as a foundation for eventual national scale.

Mixed Operational Performance

Cava's financial performance has presented a mixed bag. In the second quarter of 2025, same-store sales increased by 2.1%, falling short of analyst expectations of 6.47%. CEO Brett Schulman attributed this slowdown to consumer caution amid economic uncertainty, which reduced foot traffic.

Despite this, Cava plans to increase its store openings for the year to 68-70, up from a previous target of 64-68, and maintain its annual profit margin and core profit targets.

The first quarter of 2025 saw Cava surpass revenue expectations with a 28.1% increase to $331.8 million, driven by strong demand. Same-store sales rose 10.8%, exceeding the anticipated 10.3%. The company maintained its yearly projections for same-store sales growth (6%-8%) and profit margins (24.8%-25.2%).

The divergence in analyst opinions, coupled with the company's own adjustments to its guidance, have contributed to the stock's volatility. The downward revision of the full-year same-store sales growth forecast led to a notable drop in share price, reflecting investor concerns about the company's growth trajectory.

While Cava is seen as possessing strong long-term growth potential and an attractive return profile, the near-term challenges of same-store sales growth uncertainties and prevailing economic headwinds necessitate a cautious approach. The market will likely continue to monitor Cava's performance closely, weighing its expansion plans against the backdrop of a potentially softening consumer environment.

Cava's stock trades 1.1% higher in the pre-market leading in to this morning's open.