Sweetgreen (NYSE:SG) was lifted to Buy from Neutral at BofA on Thursday, with its price target increased to $17 from $9 per share.
BofA analysts told investors in a note that they see upside to the company's topline growth based on various factors.
"We are upgrading Sweetgreen from Neutral to Buy based on i) increasing foot traffic, ii) the prospect that same-store sales growth (SSSG) will see sustained momentum, and iii) long-term plans to automate operations," they wrote.
"According to Placer.ai foot traffic data -- 94% correlated with SSSG -- visits to SG are up 46% y/y 2Q23 QTD (vs 39% in 1Q23). Based on these trends, we raise our 2Q23 SSSG forecast to 7.0%, ahead of Visible Alpha's consensus SSSG of 4.6%."
The analysts noted that Sweetgreen's large urban store footprint had raised investor concerns about the stalled return to office. However, they stated that sustained year-on-year visits growth suggests "mobility continues to improve and SG SSSG can maintain momentum, removing a key overhang on the stock."