TD Cowen has maintained CAVA Group Inc. as a top equity pick despite recent sales headwinds, citing the fast-casual restaurant chain's long-term growth trajectory. The firm kept its 7% same-store sales forecast for fiscal 2026 unchanged, though it trimmed its adjusted third- and fourth-quarter 2026 estimates to 4% and 5% from 5% and 5.2%, respectively.
The second-quarter performance exceeded expectations, with same-store sales growth of 9.0%, driven by 5.3% traffic growth, 1.4% price increases, and 2.3% mix. Adjusted EBITDA reached $54.7 million, surpassing TD Cowen's estimate of $52.4 million. Restaurant-level margins stood at 25.7%, aligning with analyst projections.
Management provided fiscal 2026 guidance of 75 to 77 net new restaurant openings, same-restaurant sales growth of 4.5% to 6.5%, and adjusted EBITDA of $181 million to $191 million. Sales disruptions were attributed to industry-wide Cyclospora publicity, which temporarily dampened consumer sentiment. Following the initial impact, sales softened to flat or slightly positive levels at the start of the third quarter, though week-over-week improvements were observed, with the most recent week ended August 9 showing mid-single-digit percentage growth.
CAVA's operational updates included the April salmon launch, which performed as expected, and ongoing tests of shrimp in select markets. The company also offers braised beef in Philadelphia at a $3.70 upcharge and plans to launch a second market test of catering in the fall. Marketing spend remains low at approximately 1% of sales.
Other analysts have taken mixed actions on the stock: RBC Capital raised its price target, while KeyBanc, Guggenheim, DA Davidson, and Mizuho lowered theirs. Ratings among these firms range from Outperform to Neutral.
