First Watch Poised To Reach Its Goal Of Over 2,200 Domestic Locations Despite Tough Macro Conditions, Says Analyst

Stephens & Co. analyst Jim Salera initiated coverage on First Watch Restaurant Group, Inc. FWRG, with an Overweight rating and a price forecast of $20.

According to the analyst, First Watch is a frontrunner in daytime dining, specializing in breakfast, brunch, and lunch prepared with fresh ingredients.

The menu’s specialty includes chef-driven, trendy, and seasonal dishes that cater to health-conscious diners and those seeking a modern, upscale breakfast experience, Salera highlights.

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The analyst forecasts annual revenue growth in the low double digits, driven by over 10% unit growth and low single-digit same-store sales.

Salera underscores that there is a viable path for First Watch to achieve its target of over 2,200 domestic units, supported by two analysis scenarios indicating potential upside to 2,475 and 2,398 units, respectively.

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This outlook suggests sustained growth of over 10% compared to the casual dining industry’s low single-digit growth.

The analyst projects FY24 adjusted EBITDA of $108.9 million and adjusted EPS of $0.30, slightly below consensus estimates of $110.9 million and $0.32.

For FY25, the forecast includes adjusted EPS of $0.43 and adjusted EBITDA of $129.0 million, compared to the Street’s expectations of $0.42 EPS and $126.4 million EBITDA.

Conversely, the analyst cautions that a challenging consumer macro environment in the near term could impact revenue, resulting in same-store sales hitting the lower end of the long-term expectations. Furthermore, there may be additional challenges posed by Hurricane Milton.

Price Action: FWRG shares are trading higher by 7.84% to $16.14 at last check Thursday.

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