Jefferies lowers Cava Group stock price target to $100 on tough comps

Cava Group (CAVA) reported mixed Q2 2025 results, exceeding EPS and revenue forecasts but missing on same-store sales growth, leading to varied analyst reactions and price target adjustments. Jefferies lowered its target to $100 from $125 while maintaining a Buy rating, citing the same-store sales miss despite a strong EBITDA beat. Conversely, Stifel reiterated its $125 target, viewing the stock's recent decline as a buying opportunity, whereas KeyBanc reduced its target to $85, reflecting slower sales trends. These divergent perspectives underscore CAVA's profitability amidst decelerating comparable sales, creating a nuanced outlook for investors.

Analysis

Cava Group Inc. (CAVA) presented a mixed financial picture in its second-quarter 2025 report, surpassing profitability expectations while raising concerns about growth momentum. The company reported earnings of $0.16 per share and revenue of $278.2 million, beating forecasts of $0.14 and $249.66 million, respectively. This profitability was further evidenced by an EBITDA beat, driven by higher restaurant-level margins and disciplined G&A spending. However, this operational strength was overshadowed by a significant same-store sales growth miss of 2.1%, well below the 6.3% consensus estimate. This deceleration, which prompted a lowering of the full-year outlook, is attributed to difficult year-over-year comparisons following a successful product launch in the prior year. The market has reacted to these headwinds, with the stock declining -35% over the past six months, though it still trades at a high P/E ratio of 68.6x. Analyst sentiment is divided: while Jefferies and KeyBanc lowered price targets to $100 and $85 respectively due to slowing sales, Stifel maintained its $125 target, viewing the pullback as a buying opportunity. The company's strong liquidity, with a current ratio of 3.0x, and moderate debt levels provide a stable financial foundation amidst the growth uncertainty.

Key Decisions for Investors

• Given the divergent analyst ratings and the stock's -35% six-month return, investors could consider the current price a potential entry point, banking on the company's proven profitability and the view that lowered guidance is now conservative and achievable.
• Investors should weigh the company's strong operational efficiency and EBITDA growth against the significant deceleration in same-store sales and the high P/E ratio of 68.6x, which requires a return to stronger growth to be justified.
• Monitor future same-store sales results closely, as the ability to re-accelerate this metric will be the primary catalyst for the stock and will determine whether the recent slowdown was a temporary issue or a more persistent trend.