Cava Stock Rated ‘Overweight’ At KeyBanc On Strong Growth Outlook, Mediterranean Appeal

KeyBanc initiated coverage on Cava Group (CAVA) on Wednesday with an Overweight rating, citing that the restaurant chain is the leading brand in the fast-growing Mediterranean fast-casual segment, with few direct competitors.

The brokerage firm also initiated a $100 price target on Cava, according to The Fly.

Cava shares were up nearly 5% in morning trade. The stock has lost almost a fourth of its value year-to-date, including session moves.

KeyBanc believes Cava has the potential to define the Mediterranean category and bring the cuisine to new markets across the country, like Chipotle Mexican Grill (CMG) did over the last two decades with the Mexican segment.

Cava in May raised its target of net new restaurants for fiscal 2025 to 64 to 68, from the prior expectation of 62 to 66. The company opened 15 new restaurants in the first quarter and 58 in fiscal 2024.

The restaurant chain beat first-quarter sales expectations and maintained its annual same-store sales forecast. The company has experienced strong demand for its food offerings, a notable contrast to the broader dining category's slowdown.

This is in contrast to Chipotle, which in April had cut its annual comparable sales forecast. Back in January, Chipotle noted U.S. President Donald Trump's tariffs on Mexico would lead to a roughly 60-basis-point impact on its raw material costs for the year.

Chipotle relies on imports from Mexico, including avocados, unlike Cava, which primarily sources supplies domestically, with limited imports of beef and olives.

Retail sentiment on Cava is currently ‘extremely bullish,’ according to Stocktwits data, while investors remain ‘neutral’ about Chipotle.

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