Key Takeaways
- Shares of CAVA declined 8.93% Tuesday following Placer.ai data revealing U.S. restaurant visits fell 2.4% year-over-year in August.
- The Mediterranean fast-casual chain’s shares rebounded approximately 1% in premarket trading Wednesday, though this appears to be a technical bounce.
- The stock currently trades 30.1% beneath its 200-day moving average and experienced a death cross formation in August.
- Seaport Global launched coverage Wednesday with a Buy recommendation and $58 price objective.
- Wall Street maintains a Buy consensus rating with an $88.29 average target price.
Shares of CAVA tumbled 8.93% during Tuesday’s session, settling around $49.99, following the release of a Placer.ai study highlighting widespread weakness in restaurant foot traffic across America. Wednesday’s premarket session saw the stock gain roughly 1.11% to $50.54, although market watchers suggest this modest uptick shouldn’t be interpreted as a trend reversal.
According to the Placer study, restaurant chain foot traffic decreased 2.4% compared to the prior year in August. Meanwhile, retail location visits increased 0.3%, though this represented a deceleration from July’s 1.7% expansion.
Calendar timing contributed to the weakness. This year’s Labor Day holiday landed on September 7, whereas in 2025 it occurred on September 1, effectively shifting the holiday weekend outside August and negatively impacting traffic comparisons.
Dining out has become increasingly expensive for American consumers. Restaurant meal prices climbed 3.4% year-over-year in August, significantly outpacing grocery price inflation of 2.2%. Consumer confidence also deteriorated from July levels.
Bearish Technical Signals Dominate
CAVA’s technical indicators paint a challenging picture. The shares trade 20.5% beneath the 20-day simple moving average, 22.6% under the 50-day SMA, and 30.1% below the 200-day SMA.
Additionally, the 20-day SMA has fallen below the 50-day SMA, confirming near-term bearish momentum. The formation of a death cross occurred in August when the 50-day SMA dropped beneath the 200-day SMA, intensifying longer-term technical headwinds.
However, there’s a silver lining: the RSI currently registers at 26, placing it in oversold territory. RSI readings under 30 often precede short-term relief rallies, although they don’t necessarily indicate a sustained trend reversal. Resistance appears near $56, while support is established around $45.50.
Seaport Launches Bullish Coverage
Undeterred by the recent decline, Seaport Global Securities launched coverage Wednesday with a Buy recommendation and $58 price objective, aligning closely with InvestingPro’s fair valuation of $58.25.
Seaport highlighted CAVA’s unique positioning as the sole scaled Mediterranean fast-casual concept. Operating approximately 500 locations, the brand’s awareness remains substantially below the 90%-plus recognition enjoyed by established national competitors, creating significant expansion opportunities.
Newly opened locations are performing above 100% productivity targets, and recently opened restaurants are delivering same-store sales increases that outpace the system average once they mature into the comparable base.
The firm’s $58 valuation assumes approximately 29 times fiscal 2027 projected EBITDA and incorporates a comprehensive 10-year discounted cash flow model.
Wall Street opinions vary. DA Davidson maintained a Neutral stance and reduced its target to $75 citing Cyclospora contamination concerns. Guggenheim preserved its Buy recommendation but trimmed its target to $95. RBC Capital elevated its target to $95 after CAVA’s second-quarter performance, which featured 9% same-store sales growth and adjusted EBITDA of approximately $55 million, exceeding the $53 million Street estimate.
The broader analyst community maintains a Buy consensus, with the average target price sitting at $88.29. CAVA currently trades at a price-to-earnings multiple of approximately 89.3.
KeyBanc revised its price objective to $95 from $110, while keeping an Overweight recommendation. StoneX reaffirmed a Buy rating with a $110 target following discussions with CAVA’s chief executive and chief financial officer.
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