UBS reaffirmed its Buy rating and $230 price target on Darden Restaurants (NYSE: DRI) ahead of the company’s fiscal third-quarter 2026 earnings release scheduled for March 19.
The firm said it expects same-store sales momentum to remain solid across the company’s major brands despite weather disruptions. Earnings are anticipated to come largely in line with expectations even as beef costs remain elevated.
Investor expectations gathered by UBS suggest Olive Garden same-store sales could come in slightly below the consensus forecast of 4.4%, while LongHorn Steakhouse may deliver a modest beat relative to the consensus estimate of 5.7%.
Many investors also expect management to either reiterate its fiscal 2026 outlook or narrow the guidance range given macroeconomic and weather-related pressures. Current guidance includes total sales growth of 8.5% to 9.3%, including roughly a 2% benefit from a 53rd week, compared with consensus expectations of about 9%.
The company also forecasts blended same-store sales growth of 3.5% to 4.3%, new restaurant openings between 65 and 70 locations, and adjusted earnings per share of $10.50 to $10.70, including approximately $0.20 from the extra week.
UBS said investor sentiment appears somewhat cautious due to concerns about fourth-quarter comparisons and potential cost pressures from beef prices. However, the firm believes Darden’s underlying performance should remain resilient through fiscal 2026, supported by marketing initiatives and menu innovation.
At roughly 17 times consensus fiscal 2027 earnings, UBS said the shares appear attractive for a high-quality restaurant operator with strong revenue stability and the ability to protect margins despite inflationary pressures.
