Key Takeaways
- CAVA Group shares have fallen 37% over six months, and Melius Research upgraded the stock to Buy on Oct. 8 with a $95 target, 82% above the Oct. 7 close.
- The slide followed CAVA’s Aug. 11 report, where the company kept its full-year same restaurant sales guidance at 4.5% to 6.5% even though second-quarter growth was 9.0%, as a Cyclospora outbreak hurt sales.
- Analysts expect normalized EPS of $0.55 in fiscal 2026, roughly flat with 2025, before rising to $0.74 in 2027.
- Melius’s target implies about 143x forward earnings against 78x today, which makes the call plausible but stretched.
CAVA Group (CAVA) has lost 37% over the past six months. At Wednesday’s close of $52.07, the stock sat 46.5% below its April 20 closing high of $97.39.
Melius Research thinks that’s too far. On Thursday, analyst Jacob Aiken Phillips upgraded CAVA to Buy from Hold and raised his price target to $95 from $90, 82% above Wednesday’s close.
Strong quarter, cautious guidance
Second-quarter same restaurant sales rose 9.0%, with traffic up 5.3%, and revenue climbed 31.3% to $365.4 million. Yet on Aug. 11, CAVA only held its full-year same restaurant sales guidance at 4.5% to 6.5%, after growth of 9.7% and 9.0% in the first two quarters.
CEO Brett Schulman explained why: “exiting Q2, we saw near-term sales impacts related to broad concerns around lettuce and fresh produce consumption due to the Cyclospora outbreak.”
CFO Tricia Tolivar said the low end of the range “would be slightly negative same restaurant sales” in the second half. The comparisons are soft, too: same restaurant sales grew just 1.9% and 0.5% in the third and fourth quarters of 2025.
Why Melius is buying
Melius calls the selloff an overreaction, and ties it to the broader pullback in restaurant stocks.
The business backs that up. CAVA ended the second quarter with 476 restaurants, up 19.6% in a year, and marked its 500th on Sept. 23. It has no debt, $435.6 million in cash and investments, and a $100 million buyback approved on Sept. 18.
Most of the Street agrees, with 15 Buys, 3 Outperforms, 9 Holds and 1 Sell on TIKR as of Oct. 7.
Does $95 add up?
The consensus target has slipped to $82 from $90 a year ago, and the low target has collapsed to $18 from $72.
Analysts expect normalized EPS of $0.55 in fiscal 2026, essentially flat with 2025’s $0.54, before rising to $0.74 in 2027 and $0.99 in 2028 (only 8 analysts go out that far).
CAVA held its guidance in August, so nothing in the release forces cuts to those numbers. But the bull case leans on that 2027 jump.
CAVA trades at 78.4x forward earnings, about half its three-year average of 152.8x.
Where I land
The main risk: negative same restaurant sales in the back half would make 2027’s $0.74 harder to reach.
I think Melius’s call is plausible but stretched. CAVA is adding restaurants at a 20% clip with no debt, yet $95 needs both the 2027 earnings jump and a multiple near 143x while restaurant stocks are out of favor.
CAVA’s third-quarter report is the one to watch. If same restaurant sales held in the mid-single digits after the Cyclospora scare, $95 gets much easier to defend.
So what is CAVA stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
