On Tuesday, TD Cowen adjusted its outlook on First Watch (NASDAQ: FWRG), a restaurant chain, by increasing the shares price target to $26.00, up from the previous $21.00. The firm has maintained a Market Perform rating on the company's stock.
The adjustment follows First Watch's guidance for same-store sales in 2024, which is expected to be between 1% and 3%. This projection is slightly below the 3% anticipated by the pre-release Consensus Metrix.
The analyst from TD Cowen pointed to a short-term challenge in the first quarter of 2024 due to unfavorable weather conditions and a calendar shift. However, for the remainder of the year, from the second to the fourth quarter, same-store sales are anticipated to align more closely with a normalized growth rate of around 3.5%.
In addition to the revised sales outlook, TD Cowen has increased its adjusted EBITDA estimates for the years 2024 and 2025 by 6% each. This upward revision is attributed to lowered general and administrative expenses and an improvement in restaurant-level margins.
The analyst's commentary specifically noted the factors influencing the revised expectations. "We raise 2024-25E adj EBITDA by 6% each as we lower G&A and increase restaurant level margin. We raise our price target to $26," the analyst stated, emphasizing the basis for the updated price target on First Watch shares.
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