Cava Retail Investors Turn ‘Extremely Bullish’ Ahead Of Q3 Report Amid Sharp Stock Drop Last Week

Chipotle Mexican Grill’s poor earnings report last week raised concerns for the restaurant industry.

• Analysts expect the Mediterranean-food restaurant to report a 20% rise in revenue, but profit is expected to decline.
• Analysts and retail investors remain optimistic about the stock despite the recent weakness in the company’s shares.
• Cava will report third-quarter results after the market closes on Tuesday.

Cava Group, Inc.’s (CAVA) shares gained traction on Stocktwits early Monday, with retail sentiment improving ahead of the company’s quarterly results due on Tuesday. The buzz followed a sharp 15.5% slide last week — the stock’s steepest weekly drop since August.

What Is Retail Investors’ View

“Assuming cava miss earnings, it is probably baked in with stock correction, just this week alone,” commented on Stocktwits users.

The retail sentiment on the platform shifted to ‘extremely bullish’ as of early Monday, up from ‘bearish’ on Thursday, with ‘high’ message volume.

Results Watch

Analysts expect the Mediterranean-food restaurant chain to report a 20% rise in third-quarter revenue at $292.2 million, according to analysts’ consensus estimate from Koyfin. It would be the slowest pace of growth since the company went public in June 2023.

Earnings per share are expected to be $0.13, down from $0.17 a year ago and $0.16 in the sequentially previous quarter.

Chipotle Mexican Grill reported soft same-store sales last week and lowered its estimate for the metric for this year, causing the worst drop in the company’s shares in over a decade and fanning worries for the restaurant industry.

Analysts Take

Notably, brokerages such as BofA Securities, Morgan Stanley, and Goldman Sachs lowered their price targets on CAVA in recent weeks.

Currently, 12 of the 21 analysts covering the stock rate it ‘Buy’ or higher, and nine rate it ‘Hold,’ according to Koyfin. Their average price target of $83.56 implies an expectation of an over 56% upside from the stock’s last close.

Year-to-date, CAVA has declined 52.4%.

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