Story
Sweetgreen Stock Rises After Wells Fargo Upgrade Cites Recovery from Outbreak
Summary
Wells Fargo upgraded the fast-casual chain to Overweight, citing a faster-than-expected operational recovery following a summer cyclospora outbreak that had depressed customer traffic.
Sweetgreen Inc. (NYSE:SG) shares climbed on Monday after Wells Fargo upgraded the stock, signaling that the fast-casual salad chain is recovering more quickly than anticipated from a summer parasite outbreak that hampered sales.
Wells Fargo's Bullish Call
Wells Fargo analyst Anthony Trainor raised his rating on Sweetgreen shares to Overweight from a previous Equal Weight. The bank also set a new $11 price target for the stock, which implies a potential 34% upside from recent trading levels. The stock rose as much as 2.3% following the announcement.
According to the note, the new valuation is based on a multiple of 18 times the company's projected fiscal year 2028 EBITDA, with an additional $2 per share attributed to Sweetgreen's stake in the food-tech company Wonder.
Signs of a Turnaround
AdThe upgrade comes as the company shows signs of emerging from a challenging period. The market advance on Monday effectively erased the stock's decline that was triggered by a multistate cyclospora outbreak, which had caused widespread consumer avoidance of fresh leafy greens and depressed traffic.
Wells Fargo's optimism is supported by what it described as a more constructive outlook from Sweetgreen's management at a recent investor conference. The bank also noted that its proprietary channel checks indicate a sales recovery began to gain traction in September, suggesting operational adjustments to restore consumer confidence are working.
Context and Outlook
The positive developments follow six quarters marked by demand headwinds and what the analyst called "execution missteps." Looking ahead, Wells Fargo anticipates that Sweetgreen's same-store sales will turn positive by fiscal year 2027 as the operational momentum continues to build across its restaurant footprint.
Read next
More on Stocks
Getty Images Reportedly in Talks with Lenders for Rescue Financing
The stock-image company is in confidential discussions for new financing, potentially including a debtor-in-possession loan, after missing a September interest payment, according to a Bloomberg report.
Transportation Secretary, Airlines Call for $30 Billion in Aviation Infrastructure Funding
U.S. Transportation Secretary Sean Duffy and major airlines are urging Congress to approve an additional $30 billion to modernize air traffic control systems and airport facilities, significantly increasing a previous funding allocation.
TotalEnergies, Equinor Tipped for Strong Q3 Earnings by TD Cowen
TD Cowen analysts have highlighted their top integrated oil picks ahead of earnings season, citing a rising commodity environment that consensus estimates have yet to fully capture. The firm expects the sector to generate $100 billion in excess cash through late 2027.
JOLTs Job Openings, Consumer Confidence Data to Offer Key Economic Insights
Investors are bracing for a busy Tuesday with the release of the JOLTs Job Openings report and the Conference Board's Consumer Confidence index. The data will provide a crucial snapshot of the U.S. labor market and consumer sentiment, alongside a series of speeches from Federal Reserve officials.