On Thursday, Stephens, a financial services firm, announced an increase in the price target for Cheesecake Factory (NASDAQ: NASDAQ:CAKE) shares to $57.00, up from the previous target of $51.00. The firm maintained its Overweight rating on the stock.
The revision reflects the company's steady performance in a sector that has faced challenges. Cheesecake Factory's traffic has remained relatively stable over the last five quarters, a notable achievement compared to its peers, who have mostly reported negative low single-digit percentage changes.
"Furthermore, we believe a modestly improving macro environment in FY25 creates a favorable glide path for continued improvement at CAKE," the firm said.
The analysts at Stephens believes that Cheesecake Factory is in a strong position within the full-service restaurant sector, especially when considering its relative valuation.
Cheesecake Factory's strategy focuses on providing an experiential value through a broad selection of scratch-made menu items and generous portions. The company's value proposition, which emphasizes quality dining experiences over absolute cost savings, is expected to continue attracting customers.
The updated price target of $57 implies an enterprise value to EBITDA (EV/EBITDA) multiple of 9.8 times the firm's estimated EBITDA for FY25. This valuation is in line with Cheesecake Factory's five-year average multiple of approximately 10 times.
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