Guggenheim initiated coverage of CAVA Group Inc. (NYSE: CAVA) with a Buy rating and a $100 price target, citing strong underlying business fundamentals and growth prospects.
The firm acknowledged that the stock trades at approximately 40x estimated 2027 EV/EBITDA, a multiple influenced by stock-based compensation, but said the company’s fundamentals justify the premium valuation.
Guggenheim highlighted key strengths including cash-on-cash returns exceeding 40%, average unit volumes of approximately $2.9 million, a conservative balance sheet, positive free cash flow generation, and a long-term approach to same-store sales growth.
The firm projects revenue to grow at a compound annual rate of 24% between 2025 and 2028, with EBITDA expected to increase at a 32% CAGR over the same period.
The analyst expects near-term momentum to continue, supported by potential earnings beats and upward estimate revisions, which could drive the stock higher despite valuation assumptions that require relatively aggressive but achievable inputs.
Guggenheim forecasts same-store sales growth of 6.5% for 2026, above the consensus estimate of 4.6%, and believes the range of outcomes is skewed to the upside.
While macroeconomic risks in 2026 could limit the stock from returning to the $125 to $150 range seen in late 2024, the firm expects improving same-store sales trends and positive earnings revisions to support further upside from current levels.
