Bernstein sees limited upside and Evercore ISI is bullish on Investing.com

Darden Restaurants (NYSE: ) drew mixed views from analysts on Friday, with Evercore ISI upgrading the stock while Bernstein took a more cautious stance.

Evercore ISI upgraded Darden to Outperform from In Line, raising its price target to $205 from $165, citing increased confidence in sales growth, particularly at Olive Garden, which accounts for 45 percent of the company’s sales.

Evercore ISI highlighted new initiatives such as more price advertising, limited-time offers (LTOs) and Uber Eats integration as key drivers.

“We believe the company will continue to focus on profitable sales growth, allowing the EBITDA margin to improve over the next 12 months,” Evercore ISI said, also raising its same-store sales (SSS) growth estimate for the year fiscal 2026 to 3% from 1.5%.

“We also remain bullish on Long Horn (25% of sales) as it continues to gain share,” the firm added.

Instead, Bernstein downgraded Darden to Market-Perform from Outperform, citing limited upside and continued macroeconomic pressures weighing on consumer spending.

The firm noted that Olive Garden’s same-store sales fell 2.9 percent in the first quarter of fiscal 2025, marking the chain’s biggest decline in more than a decade, excluding pandemic-related disruptions.

Bernstein noted that while management has moved to a more aggressive strategy, including LTO and price advertising, they see potential long-term challenges: “We note that these attempts may hide more enduring pressures than we anticipated.”

“With the low frequency in the categories in which Darden operates, we expect it will take some time for consumers to notice the changes,” they added.

Bernstein remains concerned about risks to labor force inflation and the potential impact of tighter immigration controls, which could reduce labor force numbers.

Despite these concerns, they expect Darden to meet its fiscal 2025 guidance of 6-8% EPS growth, but have revised their price target to $180 from $190, noting that recent stock growth balanced the risk-reward profile.