Cava Stock Has Doubled Since Its IPO. This Is What Wall Street Thinks Now.

After about a month on the public market, Wall Street is mostly bullish on the restaurant chain. Shares were gaining 10% on Monday to $43.53—still about twice its IPO price—after several analysts initiated coverage of the stock with Buy or equivalent ratings.

William Blair analyst Sharon Zackfia initiated coverage of Cava stock with an Outperform rating and no price target. Nonetheless, the analyst sees “the potential for Cava’s stock to appreciate at a high-single-digit to low-double-digit
pace annually over the next decade,” as noted in a research report.

Zackfia added that “given an appealing, health-conscious, and extensively customizable menu delivered quickly and conveniently at affordable price points, Cava has garnered broad demographic appeal across household income levels, generations, and gender.”

Cava’s price points are important during a time of economic uncertainty as consumers continue to feel the pinch of stubbornly high inflation and rising interest rates. In an interview with Barron’s the day of the company’s IPO, Chief Financial Officer Tricia Tolivar said Cava has been “very thoughtful about our menu price increases, particularly over the past couple of years where we’ve done less than 5% in restaurant menu price increases.”

Placer.ai data showed that these price points seem to be working for the company. The research firm said in a May report that year-over-year monthly visits per venue have been up since January 2023, “a particularly impressive feat in light of the chain’s continued expansion, and an indication that new locations are driving traffic despite the current economic environment.”

In terms of expansion, Cava has stated in a filing with the Securities and Exchange Commission that it anticipates having over 1,000 locations in the U.S. by 2032. Jefferies analyst Andy Barish wrote that the 1,000-location target is achievable, “although the real TAM [total addressable market] likely well exceeding that target.” On Monday, Barish initiated coverage of Cava stock at Buy with a $48 price target.

Stifel analyst Chris O’Cull initiated coverage of Cava stock with a Buy rating and $48 price target.

“During the next four years, we project 20% annual revenue growth fueled primarily by at least 15% unit expansion,” O’Cull wrote, adding, “The company is in strong financial condition with no funded debt and roughly $340 million in cash on hand following the company’s IPO.” O’Cull also projects Cava will have positive annual free cash flow starting in 2026.

Write to Angela Palumbo at [email protected]