Sweetgreen's 2024 rally stays fresh as TD Cowen upgrades salad chain to buy

By Steve Gelsi

Stock rises 4% to bring its 2024 jump to 168% as analyst eyes same-store-sales boost

Investors continued flocking to Sweetgreen Inc.'s hot stock on Wednesday as the restaurant chain piled on more gains on the heels of a fresh upgrade to buy from hold at TD Cowen.

TD Cowen analyst Andrew M. Charles said he sees more upside to Sweetgreen's stock (SG) on its strength in same-store sales.

He boosted his price target on the company to $43 a share from $31 a share.

While the Consensus Metrix estimate for Sweetgreen's 2025 same-store sales growth is currently 3.8%, Charles said 5% growth is achievable.

"We like Sweetgreen's long-term business given the intrinsic combination of transparent food sourcing and guest facing technology, the two structural restaurant industry mega- themes," Charles said in a research note. "We are encouraged by execution that has improved 2024 traffic, in particular menu innovation, marketing and thru-put that we expect will sustain in 2025."

The company's Infinite Kitchen robotic food preparation unit will help boost profit margins by 0.7% to 1.4% per year from 2025 to 2029, he said.

Infinite Kitchen's "superior unit economics...can be reinvested back into lowered price points to enter markets that were previously deemed unfit for the brand," Charles said.

Sweetgreen's stock rose about 4% on Wednesday. The share price has risen by about 168% in 2024, well ahead of the 14% gain by the Nasdaq COMP.

-Steve Gelsi

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

09-04-24 1201ET

Copyright (c) 2024 Dow Jones & Company, Inc.