Shares of Cava Group are getting a fresh vote of confidence from Wall Street. RBC Capital Markets raised its price target on the fast-casual Mediterranean chain to $95, pointing to a rebound in sales after a food-safety scare and continued strength from newly opened restaurants.
The move comes as investors look for signs that the company has moved past the Cyclospora outbreak that weighed on its business earlier this year. Cyclospora is a parasite that can cause intestinal illness, and news of a contamination linked to the chain prompted some customers to stay away. That showed up in slower sales during the early part of the third quarter.
Sales momentum is building again
According to RBC, Cava's same-store sales—a key metric that tracks revenue at locations open at least a year—improved each week after that early slowdown. By last week, growth had reached the mid-single digits, a sign that customer traffic is returning as concerns fade.
The bank also highlighted the company's second-quarter performance. Same-store sales rose 9.0% in that period, beating Wall Street's forecast of 7.4%. That beat suggests demand for Cava's bowls, pitas, and salads held up better than many analysts feared, even with the food-safety issue looming.
New restaurant openings are also contributing to the growth story. RBC noted that new locations continue to outperform expectations, which is important for a company that is expanding rapidly. For a chain like Cava, the success of new stores is a big part of its long-term growth narrative.
What this means for investors
For everyday investors, the key takeaway is that Cava's recovery appears to be on track. The price target hike from RBC is a signal that at least one major bank believes the stock has more room to run, even after a strong run-up.
But it's worth remembering that price targets are just one analyst's opinion. They are based on assumptions about future growth, margins, and market conditions—all of which can change. The Cyclospora episode is a reminder that food companies face unique risks. A single contamination scare can hit sales quickly, and recovery can take time.
That said, the weekly improvement in same-store sales is a positive sign. If that trend continues, Cava could be well-positioned for the rest of the year. Investors will be watching upcoming earnings reports to see if the momentum holds.
For those who own Cava shares, the RBC note adds to a growing sense of optimism. For those considering buying, it's a reminder to weigh the company's growth potential against the risks that come with any restaurant chain.
As always, it's wise to look beyond a single analyst's call and consider the broader picture. Cava's story is about expansion and brand strength, but it's also about execution in a competitive market. The next few quarters will be telling.
