On Friday, KeyBanc Capital Markets adjusted its outlook on Darden Restaurants (NYSE:DRI), increasing the price target from $194.00 to $200.00 while maintaining an Overweight rating.
The revision follows Darden's second-quarter fiscal year 2025 earnings report, which showcased earnings per share (EPS) and blended same-store sales (SSS) growth surpassing the expectations of both consensus and buy-side investors.
The report highlighted positive SSS trends in three out of Darden's four business segments, contributing to greater store-level profitability than anticipated. Darden's diversified portfolio was noted for its ability to counterbalance concerns in the Fine Dining segment, where lower to middle-income consumers have reduced aspirational spending.
Additionally, Darden has expedited the implementation of its third-party delivery partnership with Uber (NYSE:UBER), which is now anticipated to bring about an extra $2 million in synergies stemming from its recent acquisition of Chuy's. Despite the challenges, Darden has reaffirmed its EPS outlook for the fiscal year, which now incorporates the Chuy's acquisition. The company expects this acquisition to be net neutral to the fiscal year 2025 EPS.
"However, this could prove conservative if the Company can sustain its current underlying momentum. Accordingly, we are raising our PT to $200 and our FY25/ FY26 EPS to reflect a slightly more optimistic sales/margin view," the analysts added.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.