CAVA Group (NYSE: CAVA) stock jumped more than 6% on Wednesday after analysts at Bernstein upgraded the shares to “Outperform.” The firm explained that the recent selloff has improved the stock’s risk-reward profile and that CAVA remains well-positioned for long-term growth, despite broader economic uncertainty.
CAVA shares have fallen roughly 30% year-to-date. Despite this, Bernstein maintains that there has been ‘no material deterioration’ in the company’s long-term fundamentals, and they remain optimistic ahead of the upcoming first-quarter earnings report.
“We believe the market is overly discounting near-term risks while under-valuing the long-term growth story,” Bernstein analysts wrote in a note. The firm maintained a price target of $115 for the stock.
CAVA has guided for 6-8% same-store sales growth in 2025, a forecast that Bernstein considers conservative. The analysts pointed to recent sales data suggesting the company could exceed 10% growth in the same metric.
Given its relatively affluent customer base and history of disciplined pricing, CAVA is well-positioned to weather a potential economic downturn. Bernstein highlighted that CAVA has maintained healthy margins and expects the company to achieve 15-18% unit growth in 2026, despite ongoing cost pressures.
The firm also noted that CAVA has underpriced the Consumer Price Index (CPI) by 800 basis points in recent years, enhancing its value proposition. The company’s limited reliance on imports and strong cash-on-cash returns further reduce its exposure to tariff-related risks.
Bernstein compared the market’s current treatment of CAVA to the multiple compressions seen in peers like Chipotle (NYSE: CMG) and Panera during the financial crisis. Despite this, analysts believe CAVA’s “long-term compounding opportunity” remains intact.
The firm values the company using a 20-year discounted cash flow model, assuming 21–22% annual free cash flow growth and a 9.6% weighted average cost of capital (WACC).
CAVA Group (NYSE: CAVA) stock is down by 0.12%, trading at $86.35 pre-market today, and has gained 44.88% over the past year.
Salman Akhtar is a finance, stocks, and technology journalist with years of experience across various news organizations. He has contributed his expertise to outlets such as 24NewsHD, TrimFeed, The Voice Pakistan, and TheTechBasic. Salman is passionate about making complex topics accessible to a broad audience. His dedication to delivering accurate and timely information has established him as a trusted voice in the industry. Read Full Bio
