On Friday, Oppenheimer maintained its Outperform rating on shares of Darden Restaurants (NYSE:DRI) and increased the price target to $200 from $182. The restaurant giant, currently trading at $183.44 and commanding a market capitalization of $21.55 billion, has shown impressive momentum with a 10% gain in the past week alone.
According to InvestingPro data, the stock is trading near its 52-week high of $188.82, reflecting strong investor confidence. The firm's analyst highlighted Darden Restaurants' second quarter fiscal year 2025 performance, where same-store sales (SSS) grew by 2.4%, surpassing the Street's expectation of 1.4%.
This performance led the company to confidently reiterate its full-year 2025 earnings per share (EPS) guidance, which is projected to be between $9.40 and $9.60.
The analyst noted that the visibility into improving same-store sales trends is on the rise, especially for Olive Garden. This optimism is due to easier year-over-year comparisons, new advertising and promotional strategies set to begin in January, and the planned national rollout of Olive Garden's delivery service by the end of the current quarter.
The company's solid financial health is evident in its consistent dividend payments, which it has maintained for 30 consecutive years, currently offering a 3.05% yield. InvestingPro subscribers have access to 12 additional key insights about Darden's performance and prospects. These initiatives are expected to contribute to the brand's continued momentum.
Furthermore, Longhorn Steakhouse, another chain under Darden Restaurants, has been performing exceptionally well with a 7.5% increase in same-store sales. This strong showing is a bright spot for the company, indicating robust customer demand and operational execution.
The analyst also touched upon the Fine-dining segment, which has experienced some weakness. However, there is a belief that this could turn around in the next fiscal year. The anticipation of a potential rebound in the Fine-dining segment adds to the positive outlook for Darden Restaurants.
In light of these factors, Oppenheimer has raised its estimates through the fiscal year 2026. The revised price target of $200 reflects the firm's confidence in Darden Restaurants' growth trajectory and its strategic initiatives that are expected to drive performance in the upcoming quarters.
Trading at a P/E ratio of 18.23 and showing revenue growth of 5.98% over the last twelve months, InvestingPro's Fair Value analysis suggests the stock is slightly overvalued at current levels. For detailed valuation metrics and comprehensive analysis, investors can access the full Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Darden Restaurants has been the focus of several financial firms following its positive second-quarter results. KeyBanc Capital Markets raised its price target for Darden to $200, maintaining an Overweight rating, following the company's reported earnings per share (EPS) and same-store sales growth that surpassed expectations. The firm's analysis suggests that Darden's EPS forecast could be conservative, given the company's current trajectory.
Baird also increased Darden's price target to $194, maintaining a Neutral rating, influenced by Darden's planned sales-driving initiatives and a more optimistic near-term view. Moreover, Raymond (NS:RYMD) James maintained an Outperform rating on Darden, raising the price target to $200, highlighting positive comparable sales at Olive Garden and Longhorn Steakhouse.
Stifel raised its price target for Darden to $205, maintaining a Buy rating, due to Darden's solid second-quarter earnings of $2.03 per share, slightly above the consensus estimate of $2.02. Lastly, Morgan Stanley (NYSE:MS) maintained its Overweight rating on Darden and increased its price target to $209, following encouraging second-quarter results. These are recent developments in Darden's financial journey.
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