Darden's Uber Partnership Fuels Optimism, Analysts See Market Share Gains And EPS Boost In FY25

Yesterday, Darden Restaurants, Inc. DRI reported first-quarter adjusted earnings per share of $1.75, missing the analyst consensus estimate of $1.83. Quarterly sales of $2.76 billion missed the street view of $2.80 billion.

Analysts covering the company provided their takes:

• KeyBanc Capital Markets analyst Eric Gonzalez reiterated the Overweight rating on the stock, raising the price forecast to $194 from $170.
• BMO Capital Markets analyst Andrew Strelzik maintained the Market Perform rating, raising the price forecast to $175 from $165.
• Wedbush analyst Nick Setyan reiterated the Outperform rating on Darden Restaurants, raising the price forecast to $200 from $170.
• Piper Sandler analyst Brian Mullan reiterated the Neutral rating on the company, raising the price forecast to $177 from $159.
• Truist Securities analyst Jake Bartlett maintained the Buy rating, increasing the price forecast to $195 from $185.

KeyBanc Capital Markets: The analyst anticipates potential growth from Darden’s partnership with Uber. Gonzalez also slightly raised the FY25 EPS estimate to $9.48, attributing this adjustment to a modest increase in blended same-store sales growth as Darden focuses more on price point advertising at Olive Garden. Darden will test delivery at approximately 100 Olive Garden locations during the holiday season, with plans to expand to the entire Olive Garden network by the end of FY25. It’s important to note that delivery menu prices will match those for dine-in and takeout, but customers will incur a $5 delivery fee plus a 5% service charge for this convenience.

Also Read: Darden Restaurants Gears Up For Q1 Print; Here Are The Recent Forecast Changes From Wall Street’s Most Accurate Analysts

BMO Capital Markets: While the analyst expects the company to gain incremental benefits from delivery and views the deal structure positively, they wouldn’t be surprised if sales growth lags behind competitors due to potential overlap with its existing substantial off-premise business and its absence from the third-party marketplace. Currently, Strelzik forecasts a modest boost to Olive Garden’s comparable sales in the second half of 2025 and a low-single-digit increase in FY2026.

Wedbush: The analyst projects that DRI will continue to gain market share even in a challenging consumer landscape, suggesting a strong likelihood of achieving its long-term annual return targets. The analyst emphasizes the company’s on-demand delivery collaboration with Uber, starting with a pilot in 5-6 Olive Garden units. This will expand to approximately 100 units in FQ2 ahead of the holidays, eventually launching at all Olive Garden locations with curbside to-go by the end of FY25. The partnership is set up as a first-party delivery model, and there are no plans to advertise on UberEats.

Piper Sandler: According to the analyst, the Uber partnership will begin with Olive Garden, the company’s largest brand, accounting for about 45% of revenue and 50% of segment profit in Fiscal Year 2024. Given Olive Garden’s significance to the company’s financial model, this could lead to an unexpected boost in Darden’s adjusted EPS, especially in the following year, prompting a positive reaction in the stock today.

Truist Securities: The analyst is optimistic about the widespread improvement in same-store sales (SSS) across Darden’s portfolio since July. This, along with more proactive marketing efforts and easier year-over-year comparisons in the second half of FY25, enhances the analyst’s confidence that the accelerating SSS and market share gains will bolster Darden’s premium valuation.

Price Action: DRI shares are trading lower by 1.41% to $169.85 at last check Friday.

Photo: Courtesy of Dutchmen Photography via Shutterstock

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