Sweetgreen, Inc. (NYSE: SG) experienced a substantial surge in its shares, rising by as much as 16% on Thursday. This increase propelled the stock to its highest level since November. The boost came after Bank of America Corp. made the decision to upgrade the stock from neutral to buy, accompanied by a raised price target of $17, up from $9. This move demonstrates Bank of America’s confidence in the growth potential of the popular salad chain as employees begin returning to their offices.
Analyst Katherine Griffin, in a note, highlighted that the increased foot traffic at Sweetgreen indicates the chain’s ability to sustain same-store sales growth. She cited data from Placer.ai, stating that this removes a significant concern among investors who feared that Sweetgreen’s extensive urban presence would impact sales if the return-to-office efforts faltered.
Griffin highlighted several initiatives that Sweetgreen has undertaken to maintain foot traffic. These include introducing new menu items and the launch of its loyalty program, Sweetpass, in April. Furthermore, Sweetgreen’s long-term plans to invest in automation and reduce labor costs will position the company competitively against other fast-casual chains.
Griffin expressed optimism, stating, “We see significant opportunity for the company to narrow its margin gap to segment leader Chipotle.”
Bank of America’s bullish upgrade stands out amidst a generally mixed sentiment on Wall Street. Currently, Sweetgreen has five buy ratings, excluding Bank of America, along with four hold ratings and one sell, as per data compiled by Bloomberg. The average analyst price target for the stock is approximately $12, while the shares closed at around $15 on Thursday.
