Zinger Key Points
- Darden Restaurants' FY25 sales outlook raised to $12.1B, with analysts increasing price targets after positive Q2 results.
- Analysts confident in Darden's market share growth, citing Olive Garden's strong sales and upcoming Uber delivery rollout.
Darden Restaurants, Inc. DRI shares are trading relatively flat on Friday.
Yesterday, the company reported that the second quarter adjusted earnings per share was $2.03, beating the street view of $2.02.
Looking ahead, Darden Restaurants said it now sees FY25 total sales of approximately $12.1 billion (prior outlook $11.8 billion – $11.9 billion). It reiterated diluted net earnings per share from continuing operations of $9.40 to $9.60.
Following the results, here are the analyst takes on the stock:
- BofA Securities analyst Sara Senatore reiterated the Buy rating on the stock, raising the price forecast to $211 from $195.
- Goldman Sachs analyst Christine Cho maintained the Neutral rating on Darden Restaurants, raising the price objective to $193 from $183.
- Stephens analyst Jim Salera reiterated the Equal-Weight rating on the company, increasing the price forecast to $175 from $164.
- Truist Securities analyst Jake Bartlett reiterated the Buy rating on Darden Restaurants, raising the price forecast to $200 from $195.
- Oppenheimer analyst Brian Bittner maintained the Outperform rating on the stock, raising the price forecast to $200 from $182.
- Wedbush analyst Nick Setyan reiterated the Outperform rating on Darden Restaurants, increasing the price forecast to $220 from $200.
- KeyBanc Capital Markets analyst Eric Gonzalez maintained the Overweight rating on the company, raising the price forecast to $200 from $194.
BofA Securities: According to the analyst, Olive Garden’s comps will stay positive in the second half of 2025, thanks to increased marketing efforts and potential growth from new channels like the upcoming Uber Technologies, Inc. rollout. The initial 100-store test shows that delivery order sizes are higher.
While Fine Dining continues to face challenges with a 3.8% decline in comparable sales (excluding timing shifts and weather factors), the analyst thinks this performance aligns with a return to previous trends for households with incomes under $150k, Senatore writes.
Goldman Sachs: The analyst projects Darden Restaurants to continue benefiting from its scale, the strength of the LongHorn brand, and subsegment diversification, but uncertainties remain around Olive Garden and Fine Dining traffic.
The Uber partnership is anticipated to bring increased advertising dollars to Darden Restaurants, though management has indicated they will not promote the delivery option until the full rollout in Olive Garden stores, expected by the fourth quarter of fiscal 2025 or the first quarter of fiscal 2026.
Stephens: Following the quarterly results, the analyst notes that the adjusted earnings per share estimate for fiscal year 2025 has been revised from $9.38 to $9.40, while EBITDA is adjusted from $1.939 billion to $1.962 billion.
For fiscal year 2026, the adjusted EPS estimate increases from $10.30 to $10.35, and EBITDA moves from $2.102 billion to $2.111 billion.
Truist Securities: The analyst notes that stronger-than-expected same-store sales at Olive Garden have increased confidence in both restaurant demand and the brand’s ability to gain market share through disciplined promotions.
These promotions will continue in the third quarter of fiscal year 2025 and through the new national delivery partnership, which has tested well. With operating cost inflation decreasing and solid same-store sales performance, Darden Restaurants appears to be focusing on development, which is expected to accelerate in fiscal year 2026, supporting its valuation, Bartlett writes.
Oppenheimer: The analyst notes that they have increased their earnings per share estimates for fiscal years 2025 and 2026 to $9.50 and $10.68, respectively, up from previous estimates of $9.46 and $10.61.
These new estimates are higher than the street’s consensus of $9.43 and $10.58. Bittner also sees potential for further positive revisions as sales levers are implemented.
Wedbush: Per the analyst, Darden Restaurants will continue gaining category share despite an uncertain consumer environment, which increases confidence in its ability to achieve long-term annual return targets.
The analyst writes that the FY25 EPS estimate has been raised to $9.55 from $9.50, and the FY26 EPS estimate has been increased to $10.64 from $10.32.
KeyBanc Capital Markets: The analyst writes that the Fine Dining segment remains a concern due to lower-to-middle-income consumers cutting back on aspirational purchases. However, Darden Restaurants’ diversified portfolio helps offset these challenges.
Darden Restaurants now expects an earlier rollout of its third-party delivery partnership with Uber and sees an additional $2 million in synergies from its Chuy’s acquisition, the analyst notes.
Price Action: DRI shares are trading higher by 1.92% to $186.96 at last check Friday.
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