Bernstein sees the recent pullback in Cava shares as overdone. Analyst Danilo Gargiulo upgraded shares of the fast-casual restaurant chain to outperform from market perform. Gargiulo's $115 price target implies 41.5% upside over Tuesday's closing level. "We believe the market is overly discounting near-term risks while under-valuing the long-term growth story," Gargiulo said in a Wednesday note to clients. Cava's stock popped more than 4% in Wednesday premarket trading following the upgrade. But shares of the company, which went public in 2023 , have plunged around 28% this year. Gargiulo said the stock could be in for more near-term volatility as investors search for a bottom. However, he said the valuation has already compressed to around where Chipotle Mexican Grill and Panera Bread, which is private, sat during the global financial crisis. Cava should be one of few consumer companies not to have to cut guidance given the uncertain economic backdrop, according to Gargiulo. The company has strong year-to-date sales and a same-sales growth forecast of between 6% and 8%, per the analyst. Part of why Cava can be shielded from an economic downturn is its higher-income customer base and the business' disciplined pricing actions, Gargiulo said. Broadly speaking, he noted that fast-casual chains have performed better than the market in prior recessions. From a financial standpoint, Gargiulo called the company's margins and cash-on-cash returns "healthy." This bolsters the outlook for between 15% and 18% unit growth in 2026, he added. Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today's dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles and Dan Ives, with a special edition of Pro Talks with Tom Lee. You'll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!
