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Summary

  • Darden Restaurants (NYSE: DRI) owns some of the largest US full-service restaurants like Olive Garden, Cheddar’s Scratch Kitchen, and The Capital Grille.
  • Citigroup’s price target on DRI of US$ 195 was the highest among all brokers that raised their target price on the stock.
  • Darden expects full-year total sales to range between US$ 11.5 and US$ 11.6 billion for fiscal 2024.

Darden Restaurants (NYSE: DRI) is a restaurant chain operator in the US, with a market capitalization of around US$ 20 billion. It is the parent company of some of the largest US full-service operators including Olive Garden, Cheddar’s Scratch Kitchen, and The Capital Grille among many others.

The service sector giant’s total sales for the fourth quarter of fiscal 2023 rose 6.4% to US$2.8 billion as compared to the same quarter in the previous year. Alongside these results, Darden reported an 8% sequential increase in its Q4 dividend. A cash dividend of US$ 1.31 per share is payable to shareholders of record as on July 10, 2023.

Darden’s CFO Raj Vennam stated that the company has “returned over US$ 1 billion to shareholders in the form of dividends and share repurchases.”

As per data available on EODHD/Others, 29 brokers have covered DRI. Among these, ten have given DRI a ‘Strong Buy’ rating, nine have given it a ‘Buy’ rating and ten have given it a ‘Hold’ rating. None of the analysts have given DRI a ‘Sell’ or ‘Strong Sell’ rating.

What do these results mean for Darden’s Price Target?

EODHD/Others data suggests that Darden has a consensus mean price target of US$ 173.92 as on June 26, 2023. The mean recommendation rating on the stock is 2 on a scale of one to five, which represents ‘Buy’ rating. Here, one stands for a ‘Strong Buy’ rating and five stands for ‘Strong Sell’ rating.

As per EODHD/Others date at least nine brokerages raised their price targets on the stock following its Q4 earnings announcement. The highest price target among them is Citigroup’s at US$ 195, which is an upside potential of 20.8% over DRI’s closing price on Friday.

Image source: ©2023 Kalkine®; Data source: DRI EODHD/Others

Wedblush Securities also upgraded its price target on Darden to US$ 178, which is 10.35% higher than Friday’s closing price. The broker also upgraded its rating on DRI to ‘Outperform’ on June 23, 2023.

However, Royal Bank of Canada lowered its price target on DRI to US$ 183 from US$ 185 stating weaker demand trends in its fine-dining services as the primary reason.

Consistent guest habits behind Darden’s Q4FY23 results

As per Reuters, Jeffries has stated that guest habits have remained consistent with limited trade-down to cheaper items at Cheddar’s, a Darden-owned casual dining chain. Broker Stifel believes that Darden has outperformed in wider casual dining industry.

Alternatively, TD Cowen believes that fine dining traffic headwinds might be underway for DRI in Q1 of next fiscal year as consumers seek value offerings.

Amid these broker recommendations, Darden’s full year financial outlook for fiscal 2024 includes total sales ranging from US$ 11.5 to US$ 11.6 billion. The company also expects approximately 50 new restaurant openings for the upcoming fiscal year.

Darden’s closing price on Friday, June 23, 2023, was US$ 161.30. The stock hit its 52-week high of US$ 168.98 earlier this month on June 15, 2023.