Darden Restaurants Inc (NYSE:DRI), Olive Garden’s owner, got a price target boost from Jefferies analysts, who have renewed confidence in the company’s ability to increase traffic at its flagship restaurant.
The analysts upped their price target to $210 from $165. Shares traded hands little changed at $217 on Friday afternoon.
“We have become increasingly positive on Darden’s ability to return its core Olive Garden brand to 'Every Day Affordable Price' (EDAP) leadership in casual dining and compete more effectively for traffic going forward,” the analysts wrote, noting that recent alternate data supports expectations for a solid fiscal fourth quarter report when Darden releases its latest earnings on June 20.
The optimism stems in part from Olive Garden’s recent promotional efforts, including the return of its “Buy One Take One” offer, which appears to have helped foot traffic accelerate quarter-over-quarter by 600 basis points.
“Our view is that the company is returning to an EDAP leadership position, without sacrificing strong margins at Olive Garden,” the analysts said.
Jefferies also highlighted signs that Darden’s previously unconventional strategies, like adjusting the timing of limited-time offers and investing in delivery through Uber Direct, are beginning to yield results. “The resulting stabilization and early signs of inflection have been encouraging,” they noted.
As such, Jefferies modestly increased its same-store sales forecast for Olive Garden in fiscal 2026 to 3%, up from 2%, and now expects 4% same-store sales growth in fiscal Q4 2025.
However, they stopped short of upgrading the stock to a 'Buy,' maintaining a Hold rating due to its “rich” valuation.
“(Darden's) stock has re-rated higher despite holding in above peers and the broader market leading up to post-Liberation Day troughs, and is currently trading about its historical valuation,” they wrote.
Analysts also noted Darden’s muted growth profile. “Despite our incrementally less negative view around near-term fundamentals, unit growth remains somewhat muted,” they wrote, adding that acquisitions were yet to move the needle.
“We balance recent traffic improvements, well-reflected in stock, and optimism against a pace of unit growth that has yet to meaningfully accelerate,” Jefferies concluded.