Jefferies upgrades Darden on improving Olive Garden traffic and value positioning

June 14, 2025 01:17 AM AEST | By Investing

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Jefferies upgrades Darden on improving Olive Garden traffic and value positioning — Image source: Kalkine Media

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Investing.com -- Jefferies upgraded Darden Restaurants (NYSE:DRI) to Hold from Underperform, saying signs of a traffic recovery and renewed value messaging at its core Olive Garden brand support a more neutral stance on the stock.

The firm raised its price target to $210 from $165, citing modest estimate increases and better visibility into operating margins and total shareholder return.

While Jefferies still views Darden’s valuation as elevated, it said recent initiatives appear to be helping the company regain its position as a price leader in casual dining.

Jefferies cited a 600 basis point sequential improvement in Olive Garden foot traffic in the fiscal fourth quarter, ending May.

Same-restaurant sales at Olive Garden are now expected to rise 4% in the quarter, up from a prior estimate of 2.5%.

For fiscal 2026, Jefferies forecasts 3% growth, above its previous 2% estimate.

While the firm remains cautious on Darden’s growth rate relative to peers, citing lower unit expansion and limited impact from recent acquisitions, it acknowledged that the stock’s liquidity, consistency and exposure to U.S. consumers make it attractive for some investors.

Still, Jefferies noted the shares have outperformed the market and peer group since the first quarter lows, and now trade slightly above their historical average on a multiple basis.

The new price target implies about 12 times estimated calendar 2026 EBITDA, compared with a historical average of 11.5 times.

This article first appeared in Investing.com

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