Sweetgreen Stock Upgrade
Sweetgreen shares jump following Wells Fargo upgrade citing a faster-than-expected operational recovery.
Anonymous
Sweetgreen shares rose as much as 6.8% after Wells Fargo upgraded the salad chain to Overweight from Equal-Weight, citing signs of a faster-than-expected recovery from the cyclospora outbreak that had hurt customer traffic and weighed on its stock. Wells Fargo said the outbreak-related pressure is fading and pointed to improving operating fundamentals; one analyst set an $11 price target. Sweetgreen has also outlined steps to improve efficiency, including a new assembly-line model and daily inventory counts, and plans to develop its menu to build dinner sales. The upgrade follows a steep summer decline in the company’s market value, while its annual outlook was cut and store visits lagged the broader fast-casual sector.
Key Points
1
The CDC said the cyclospora outbreak had ended on Sept. 11, after investigators traced its source to shredded iceberg lettuce served at Taco Bell.
2
Sweetgreen said its own supply chain was not affected by the outbreak.
3
Dinner currently accounts for 40% of Sweetgreen’s revenue, giving the company a significant opportunity to grow that daypart through menu changes.
4
Wells Fargo analyst Anthony Trainor expected Sweetgreen to be near its pre-outbreak pattern by the end of the third quarter, with traffic and comparable sales essentially unchanged, and forecast comparable sales turning positive in fiscal 2027.
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