Cava Shares Face Sustained Downturn as Expansion Fails to Offset Weak Fundamentals

Cava Group shares continue their downward trajectory as the restaurant chain confronts disappointing operational results and diminishing analyst confidence. The company’s latest quarterly report revealed concerning trends that have prompted significant reassessments across Wall Street.

Quarterly Performance Falls Short

The financial community expressed widespread disappointment with Cava’s recent earnings release. While revenue reached $292.24 million, representing substantial year-over-year growth of 19.9%, this figure still fell marginally below projections. More troubling was the adjusted earnings per share of $0.12, which missed the consensus estimate of $0.13.

The underlying operational metrics proved particularly concerning. Comparable restaurant sales growth registered a modest 1.9%, driven primarily by price increases rather than customer traffic, which remained essentially flat. This weakness prompted management to revise their full-year guidance downward for both revenue growth and restaurant-level margins.

Analyst Community Responds with Widespread Target Reductions

Financial institutions have systematically lowered their valuation expectations for Cava in recent weeks. Following the November 4 third-quarter earnings announcement, multiple firms implemented substantial price target reductions:

Should investors sell immediately? Or is it worth buying Cava?

• TD Cowen decreased their target from $80 to $67
• Keybanc adjusted from $85 to $65
• Stifel reduced from $100 to $75
• Piper Sandler lowered from $100 to $71
• Barclays cut from $64 to $52

The trend continued with Argus Research recently slashing its price objective from $76 to $60, while maintaining a “Buy” recommendation. The consensus message indicates that near-term valuation requires adjustment, even if long-term prospects remain theoretically intact.

Expansion Strategy Faces Mounting Pressure

Despite operational headwinds, Cava maintains its aggressive growth strategy. The company plans to open between 68 and 70 new locations during 2025, projecting restaurant-level margins between 24.4% and 24.8%.

However, market performance tells a different story. Since the beginning of the year, Cava shares have declined approximately 58% in value. The current average price target among 17 analysts stands at $72.31, significantly below previous optimistic projections.

The company’s recent launch of “The CAVA Shop” merchandise collection represents an attempt to diversify revenue streams amid negative headlines. Nevertheless, the fundamental question remains whether rapid expansion can sufficiently compensate for deteriorating core operational metrics as investor patience wears thin.