Shares of CAVA Group (NYSE: CAVA) fell more than 6% on Monday after TD Cowen downgraded its outlook for the stock, lowering the price target from $130 to $120, while maintaining a Buy rating.
CAVA stock is currently priced at around $80, with a market capitalization of $9.94 billion. The shares have declined by 40% over the past six months. Despite this drop, TD Cowen noted that the company’s underlying fundamentals have remained mostly unchanged.
The analysts explained that the price target reduction reflects a broader pullback in market valuations, particularly in the fast-casual dining sector. However, they still see significant upside potential for CAVA from its current trading levels.
The firm also pointed out that previous concerns about an inflated valuation had dampened investor interest in the stock. However, with CAVA now trading at a more reasonable valuation, sentiment has shifted, and many investors find the current price more attractive.
In a note to clients, TD Cowen wrote,
“Justifying upside has become easier with shares ~50% off the high despite little to no change in fundamentals. We lower our price target to $120 given the pullback in market and fast casual multiples, suggesting significant upside from current levels.”
In summary, while TD Cowen has trimmed its price target for CAVA Group (NYSE: CAVA), the firm maintains a bullish stance. Analysts believe the company’s current valuation presents an opportunity for investors, expecting the stock to rebound as market conditions stabilize and investor sentiment improves.
Edward Cooke is a financial analyst, freelance writer, and editor. He has six years of experience in financial journalism. He has an in-depth understanding of equities markets, tracking major indices and providing real-time analysis on stock price movements, corporate earnings, and market sentiment.
