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Investing.com — Breadsticks are poised to win the post-COVID-19 casual dining frenzy, analysts said.
Goldman Sachs (NYSE:GS) initiated covering of Darden Restaurants (NYSE:DRI) with a buy and a price target of $136, while Morgan Stanley bumped its view of the Olive Garden owner to overweight from equal weight with a price target of $142, according to StreetInsider.
DRI shares are up more than 2% on the ratings news. The stock is trading at an all-time high after plummeting in March upon the closure of businesses around the world to stem the rampant spread of the coronavirus. Although vaccinations have begun to be administered around the world, thousands of people are still dying every day because of the virus.
“We believe DRI will be one of the biggest beneficiaries of broader economic re-opening within our Casual Dining coverage given share gain opportunities from closing independents and resurgent consumer spending and business spending/travel,” Goldman Sachs analyst Jared Garber said in a note, according to StreetInsider. “We expect margins to expand based on the company’s cost-savings initiatives and believe DRI will be able to use its large cash balance (~$770mn, vs. historical average of less than $300mn) to drive growth across its brands and potentially engage in M&A opportunities.”
Goldman’s margin level and profit estimates are ahead of consensus.
Morgan Stanley (NYSE:MS) analyst John Glass, meanwhile, sees a surge ahead in dining out post-Covid.
“We upgrade DRI to OW as our preferred play on a potentially stronger-than-expected surge in demand for dining out post- Covid, margin visibility, and falling unit supply,” the analyst said, according to CNBC Pro.
