Shares of fast-casual salad chain Sweetgreen (NYSE: SG) were moving higher today as the company got a bullish note from a Wall Street analyst. The stock was up 4.5% at 1:50 p.m. ET.
Image source: Sweetgreen.
Oppenheimer analyst Brian Bittner weighed in on Sweetgreen this morning, calling the restaurant stock a top pick heading into its second-quarter earnings report on Aug. 8.
A recent pullback by the stock seems to have set up an opportunity for investors due to the company’s same-store sales growth and margin expansion, and the analyst is also bullish on the stock over the long term in part because of the impact of Infinite Kitchens, Sweetgreen’srobotic assistant that helps expedite orders and prep.
Oppenheimer maintained an outperform rating on the stock with a price target of $34. The stock closed Thursday at $24.40.
Sweetgreen has been one of the more exciting restaurant stocks to come on the market in recent years, though its IPO timing was poor as it went public just when the pandemic stock market was peaking.
The company is the leader in the fast-casual salad space and only has slightly more than 200 locations, giving it a long runway for growth. It also generates average unit volumes, or average sales per restaurant, of around $3 million, putting it near the top in the fast-casual industry and on par with Chipotle, one of the best-performing restaurant stocks of the last 20 years.
Additionally, Infinite Kitchens offers Sweetgreen a significant opportunity to differentiate itself and improve its margins. Looking ahead to the second-quarter report, analysts expect revenue to increase 15.4% to nearly $181 million and a loss per share of $0.10, compared to a loss per share of $0.19 in the quarter a year ago. Sweetgreen has a recent track record of beating estimates. If it can do it again, the stock could soar when that report comes out Aug. 8.
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Jeremy Bowman has positions in Chipotle Mexican Grill. The Motley Fool has positions in and recommends Chipotle Mexican Grill. The Motley Fool recommends Sweetgreen. The Motley Fool has a disclosure policy.
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