UBS Raises Darden Restaurants (NYSE:DRI) Price Target to $195 - Positive Momentum and Growth Potential
UBS has maintained a Buy rating on Darden Restaurants (NYSE:DRI) stock and increased the price target to $195 from $188, citing positive developments within the company despite recent challenges at its Olive Garden chain. The firm expressed optimism about Darden's sales momentum and strategic initiatives aimed at boosting customer traffic and sales.
Key factors contributing to Darden's long-term sales include potential from delivery services and consistent performance from its LongHorn Steakhouse brand. UBS also highlighted Darden's focus on value messaging and other initiatives driving traffic as supportive of improved sales and earnings momentum.
The valuation of Darden Restaurants at around 16.5 times the consensus FY26 EPS was deemed attractive by UBS, with expectations of a 10-15% long-term total shareholder return. The firm anticipates a valuation multiple that could reach the higher end of Darden's historical range of 15-20 times earnings.
Despite upcoming promotions like the Never Ending Pasta event, UBS believes that the new partnership with Uber for delivery services could act as a positive catalyst for Darden. This partnership is expected to provide further upside following recent gains.
In recent news, Darden Restaurants Inc., the parent company of Olive Garden and LongHorn Steakhouse, reported mixed results for the fiscal year 2025 first quarter. Despite some challenges, including a drop in fine dining performance, Darden remains focused on value-driven promotions and competitive pricing.
Darden's CEO, Rick Cardenas, continues to express confidence in the company's long-term strategy, highlighting key innovations and partnerships. The company's pending acquisition of Chuy's is expected to further support its growth.
In conclusion, Darden Restaurants (NYSE:DRI) shows promising growth potential and a strong commitment to shareholder value. Investors can consider this stock for potential long-term returns and growth opportunities.
Analysis:
- UBS raised Darden Restaurants' price target to $195 from $188, citing positive sales momentum and strategic initiatives.
- Darden's focus on delivery services and value messaging is expected to drive long-term sales growth.
- The company's attractive valuation and potential partnership with Uber for delivery services are seen as positive catalysts.
- Despite challenges, Darden remains confident in its long-term strategy and expects strong performance trends.
- Investors can consider Darden Restaurants for potential total shareholder returns and growth opportunities.