Darden Restaurants 'Continues To Be Resilient': 5 Analysts Dive Deeper Into FQ1 Print, Outlook

Darden Restaurants, Inc. DRI reported on Thursday an earnings beat, despite underwhelming fine dining sales.

The results came amid an exciting earnings season. Here are some key analyst takeaways from the earnings release.

Wedbush On Darden Restaurants

Analyst Nick Setyan maintained an Outperform rating while reducing the price target from $178 to $165.

Darden Restaurants reported its fiscal first-quarter earnings ahead of expectations, driven by better-than-expected same-store sales growth and margin upside, Setyan said in a note.

While the company reiterated its full-year same-store sales growth guidance, the “recent category choppiness cannot be ignored,” the analyst stated.

He added Darden Restaurants should continue to gain share and that there is high visibility into its ability to “achieve or exceed current consensus FY24 expectations.”

Truist Securities On Darden Restaurants

Analyst Jake Bartlett reiterated a Buy rating, while raising the price target from $186 to $190.

“We view reiterated FY24 guidance as conservative, given still strong SSS outperformance, lower than expected F1Q24 commodity inflation, decelerating wage inflation and newly found Ruth's synergies,” Bartlett wrote in a note. He added that the consumer "continues to be resilient.”

“DRI's SSS outperformance has historically accelerated during periods of macro pressure, suggesting limited potential downside to estimates,” the analyst further stated.

Check out other analyst stock ratings.

Morgan Stanley On Darden Restaurants

Analyst Brian Harbour maintained an Overweight rating and price target of $77.

Darden Restaurants delivered a “strong quarter” overall, with sales, operating profit and earnings modestly higher than expectations, Harbour said. He added that these results were “largely assumed by investors.”

“Broader concerns remain an overhang on casual dining, but we still view DRI as a relative winner with good earnings visibility,” the analyst further wrote.

Stifel On Darden Restaurants

Analyst Chris O'Cull reiterated a Buy rating and price target of $178.

The company’s better-than-expected restaurant profits were driven both by sales and favorable food and labor costs, O'Cull said.

While the company's analysis indicated the softness in trends “relates to a return of pre-COVID seasonal patterns,” October “should be a litmus test for this analysis,” the analyst wrote. “We believe Darden remains well-positioned to outperform the industry due to its operational sophistication, latent pricing power, and scale advantages, evidenced by the consistently wide performance gap to its segment over the last few quarters,” he added.

KeyBanc Capital Markets On Darden Restaurants

Analyst Eric Gonzalez reaffirmed an Overweight rating and price target of $175.

“Despite better than expected F1Q24 results, Darden reiterated all components of its full-year guidance — though this likely reflects conservatism given higher Ruth Chris synergy targets and softer than expected food inflation during the first quarter, which are only partially offset by higher performance compensation/G&A expense,” Gonzalez wrote in a note.

“We continue to view Darden as a long-term share gainer with credible sales drivers, industry-leading scale and a diversified portfolio of brands that should enable it to outperform through various cycles,” he added.

DRI Price Action: Shares of Darden Restaurants had declined by 0.37% to $144.90 at the time of publication Friday.

Photo: Shutterstock