1 Wall Street analyst thinks Kava stock is headed for $158. Is it buying?
Kava group (NYSE: CAVA ) It’s one of the hottest restaurant growth stocks to come along in a while. In the year It rallied to above $170 in 2024 before pulling back.
But Argus Research analyst Christine Dooley sees the dip as a buying opportunity. Dooley recently reiterated her $158 buy rating on the shares. Price target She gave them in November. This figure is 37% higher than the current share price of $115.
Kava is growing at an amazing rate. In the third quarter, revenue grew 39 percent year over year. The company is seeing growth by opening more locations, but what’s most impressive is the growth in existing restaurants. Same-restaurant sales increased 18 percent year-over-year.
Our third quarter results demonstrate the strength of the Mediterranean category’s defining brand and the broad appeal of our unique value proposition. .
It’s also showing that it can expand profitably, growing from $6.8 million in net income in Q3 2023 to $18 million in Q3 2024. Kava Restaurant’s standard profit margin is 25%, which equates to Chipotle Mexican Grill.
Chipotle has delivered monster returns to investors over the past 15 years, but the valuation has never been this expensive. Kava currently trades in bubbles Price-for sale A multiple of 14.8, which might be fair for a fast-growing software company, but not for a restaurant chain. Most analysts rate the stock a “hold.”
Wall Street analysts can sometimes point investors to stocks worth buying on the dip, but in this case, I don’t follow Argus’s advice. Kava may rebound in the near term, but its upside potential may be limited over the next few years until the company grows to the stock’s expected high valuation.
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