Melius Upgrades CAVA, Sees Sharp Rebound After Six-Month Selloff
CAVA's stock has dropped 37% over six months, and Melius Research upgraded it to Buy on Oct. 8 with a $95 price target, implying 82% upside from the prior close. The decline followed an Aug. 11 report where CAVA kept its full-year same-restaurant sales outlook at 4.5%-6.5% despite 9.0% second-quarter growth, as a Cyclospora outbreak weighed on sales. Analysts project normalized EPS of $0.55 in fiscal 2026, roughly flat versus 2025, before rising to $0.74 in 2027.
CAVA shares have shed more than a third of their value in six months, closing Wednesday at $52.07, which was 46.5% under an April 20 peak of $97.39. Melius analyst Jacob Aiken Phillips moved the rating to Buy from Hold and lifted the target to $95 from $90.
The second quarter brought 9.0% same-store sales growth, 5.3% higher traffic and $365.4 million revenue, up 31.3%. Yet management left annual same-store guidance at 4.5%-6.5% on Aug. 11, citing produce-related Cyclospora worries. CAVA had 476 locations, no debt, $435.6 million cash/investments, and a $100 million buyback.
Melius’s upgrade could shape how investors view beaten-down restaurant shares, potentially drawing more attention and capital toward CAVA and peers. If the rebound thesis holds, the chain’s expansion may support jobs, suppliers, and diners seeking more locations. If same-store sales stay soft, however, hiring, new-store plans, or shareholder returns may face pressure. Consumers and workers tied to the fast-casual sector could therefore feel indirect effects, while ordinary investors may see portfolio swings depending on whether the call proves right.