Shares of CAVA Group Inc (NYSE:CAVA) rallied in early trading on Wednesday, after the company Tuesday reported upbeat first-quarter results.
The company's 2026 guidance leaves room for beats and raises throughout the year, according to TD Cowen.
The CAVA Group Analyst: Analyst Andrew Charles reiterated a Buy rating and price target of $100.
The CAVA Group Thesis: The company may have avoided raising the 2026 adjusted EBITDA in-line with the sales outlook to allow it to invest in "labor and digital/data, that we expect to fuel future sales beats," Charles said in the note.
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Q1 Results: CAVA Group reported a sales-driven adjusted EBITDA beat, the analyst noted. The company generated same-store sales of 9.7%, beating the consensus of 6.2%, and adjusted EBITDA rose to $61.7 million, topping the consensus of $56.8 million, he added.
CAVA Group's same-store sales figure was the best of publicly traded U.S. restaurants in the first quarter, while also representing the largest sequential acceleration in same-store sales in the first quarter, Charles noted.
"We get the sense this acceleration was led by culinary including the return of popular white sweet potatoes, but not driven by a single factor," as the company demonstrated strength across geographies and consumer cohorts, the analyst further wrote.
Growth in CAVA Group's digital business accelerated by 190 basis points (bps) year-on-year and 100 bps sequentially, he added.
2026 Outlook: Management raised their full-year same-store sales guidance to 7.8%, from their prior projection of 6.1%, which implies same-store sales in the second quarter being roughly in line with the first before decelerating to mid-single-digits over the remainder of the year, Charles said.
The guidance encompasses "an abundance of caution given the macro backdrop, though the company is not currently seeing any impact from macro challenges," he further stated.
CAVA Price Action: Cava Group shares were up 6.54% at $83.23 at the time of publication on Wednesday, according to Benzinga Pro data.
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