Jefferies has shifted its stance on Darden Restaurants from Underperform to Hold, citing a resurgence in sales momentum and a more favorable outlook for key brands like Olive Garden and LongHorn Steakhouse. The analyst team at Jefferies raised their target price to $210, reflecting increased confidence in the company’s operational leverage and future growth prospects.
The catalyst for this upgrade includes a steady recovery in same-store sales, stronger-than-expected customer traffic, and the early success of delivery partnerships like UberDirect. Olive Garden’s improving traffic trends and LongHorn’s strong performance played central roles in boosting sentiment. Jefferies also acknowledged the company’s disciplined cost management and real estate strategy, which continues to support margin stability.
🍽️ Olive Garden & LongHorn showing above-industry comp growth
🚗 Delivery via UberDirect adds incremental revenue potential
📈 Strategic store openings and smart acquisitions like Chuy’s fueling expansion
💰 $338M returned to shareholders last quarter, including $166M in dividends
Darden’s dividend strength remains a cornerstone for investors. With an annual payout of approximately $5.24 per share, the current dividend yield sits near 3.5%. This consistent return is backed by solid free cash flow and a strong history of capital allocation, including over three decades of dividend increases. The upgrade by Jefferies underscores a belief that even in a slower consumer environment, Darden is positioned to weather challenges and sustain shareholder returns.
The shift from Underperform to Hold reflects a more balanced view: downside risks appear limited, and Darden’s solid execution makes the stock a steady hold for income-focused investors.