On Wednesday, JPMorgan (NYSE:JPM) assumed coverage of Sweetgreen Inc (NYSE: SG), a fast-casual salad chain, with an Overweight rating and a price target of $13.00. The firm's coverage transition comes as Sweetgreen faces the challenges of urban recovery and expansion into new markets following its initial public offering (IPO).
The company, which went public on November 17, 2021, with an IPO price of $28, experienced significant stock price fluctuations in the subsequent period. After initially trading as high as $56, the stock price had dropped to as low as $6.30 by March 27, 2023. This volatility reflects the difficulties Sweetgreen has encountered over the past two years.
In response to these challenges, Sweetgreen has made strategic adjustments to its business operations. The company has reduced its general and administrative (G&A) spending and shifted its focus towards a more conservative growth strategy. This approach is aimed at preserving capital while striving to develop a business model that can be scaled and replicated more effectively.
Additionally, Sweetgreen has been working on enhancing its brand appeal and customer loyalty. The company introduced a loyalty program and new menu items that are more substantial, intending to broaden its customer base and increase the frequency of visits.
JPMorgan's current price target of $13.00 indicates a level of confidence in Sweetgreen's ability to navigate through its post-IPO challenges and execute its revised growth strategy successfully. The Overweight rating suggests that JPMorgan views Sweetgreen's stock as a potentially better investment compared to other companies in the same sector.
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