CAVA shares rise after strong quarterly earnings beat

CAVA Group Inc. shares surged 8% in premarket trading on Wednesday after the fast-casual restaurant chain reported quarterly earnings that exceeded analyst expectations.

The company posted adjusted earnings per share of 27 cents, topping the 24-cent estimate from Refinitiv IBES. Revenue rose 16% year-over-year to $276.9 million, also surpassing the $268.5 million forecast.

Same-store sales, a key metric for restaurant operators, increased 10.2% in the quarter, driven by higher customer traffic and menu price increases. CAVA attributed the growth to continued expansion in its core Mediterranean-inspired offerings and a successful loyalty program.

Analysts at Wedbush maintained their outperform rating on the stock, citing CAVA’s strong execution and market share gains in the competitive fast-casual segment. The firm raised its price target to $75 from $65, representing roughly 20% upside from Tuesday’s closing price of $62.35.

CAVA, which went public in June 2023, has expanded its footprint to over 300 locations across the U.S. and Canada. The company has positioned itself as a premium alternative to traditional fast-food chains, emphasizing fresh ingredients and customizable meals.

Investors have closely watched CAVA’s ability to sustain growth amid rising labor and food costs. The earnings report suggests the company is managing these pressures while maintaining profitability, a positive sign for the sector.

CAVA’s stock has gained roughly 15% this year, outperforming many peers in the restaurant industry. The company is scheduled to hold an earnings call with analysts later today to discuss the results in further detail.