On Monday, Stifel, a financial services company, adjusted its stock price target for Darden Restaurants (NYSE:DRI), raising it to $190 from the previous target of $185, while keeping a Buy rating on the stock.
The firm anticipates that Darden will report third-quarter earnings per share (EPS) for fiscal year 2024, which ended in February, that will marginally surpass the consensus estimate of $2.63. Stifel expects a 1.2% increase in consolidated same-restaurant sales (SRS), slightly under the Street's projection of 1.4%.
Darden, which had predicted less favorable weather conditions for the third quarter, is expected to see its Olive Garden brand deliver comparable sales in the range of 1.0-1.5%, slightly below the Street's expectation of 1.7%. Meanwhile, LongHorn Steakhouse is projected to outperform expectations with a 3.5% increase in comparable sales, compared to the Street's forecast of 3.1%.
The company's performance relative to the industry is a point of interest for investors, especially considering Darden's track record of surpassing industry benchmarks for guest count comparables by a significant margin throughout the year to date. The strength of sales in the final weeks of the quarter and the extent to which traffic trends have surpassed industry averages will likely be key focal points.
Stifel's confidence in Darden's position is reflected in their expectation that the company will achieve full-year earnings at or near the top end of its guided range of $8.75 to $8.90. Accordingly, the firm has left its full-year EPS estimate for fiscal year 2024 unchanged at $8.88, closely aligned with the Street's consensus of $8.87.
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