Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Olive Garden Set to Boom on Post-COVID Dining: Goldman & Morgan Stanley

Published 2021-01-19, 10:31 a/m
Updated 2021-01-19, 10:32 a/m
© Reuters.

© Reuters.

By Christiana Sciaudone

Investing.com --  Breadsticks are poised to win the post-COVID-19 casual dining frenzy, analysts said.

Goldman Sachs (NYSE:GS) initiated covering of Darden Restaurants (NYSE:DRI) with a buy and a price target of $136, while Morgan Stanley bumped its view of the Olive Garden owner to overweight from equal weight with a price target of $142, according to StreetInsider.

DRI shares are up more than 2% on the ratings news. The stock is trading at an all-time high after plummeting in March upon the closure of businesses around the world to stem the rampant spread of the coronavirus. Although vaccinations have begun to be administered around the world, thousands of people are still dying every day because of the virus.

"We believe DRI will be one of the biggest beneficiaries of broader economic re-opening within our Casual Dining coverage given share gain opportunities from closing independents and resurgent consumer spending and business spending/travel," Goldman Sachs analyst Jared Garber said in a note, according to StreetInsider. "We expect margins to expand based on the company’s cost-savings initiatives and believe DRI will be able to use its large cash balance (~$770mn, vs. historical average of less than $300mn) to drive growth across its brands and potentially engage in M&A opportunities."

Goldman's margin level and profit estimates are ahead of consensus.

Morgan Stanley (NYSE:MS) analyst John Glass, meanwhile, sees a surge ahead in dining out post-Covid.

“We upgrade DRI to OW as our preferred play on a potentially stronger-than-expected surge in demand for dining out post- Covid, margin visibility, and falling unit supply," the analyst said, according to CNBC Pro. 

 

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.