Sweetgreen Inc.'s stock (NYSE: SG) saw a significant boost, erasing its prior decline caused by Cyclospora outbreak concerns, after Wells Fargo upgraded the restaurant chain's rating from Equal Weight to Overweight. The new price target set by Wells Fargo is $11.00, suggesting a 34% upside from its current trading price of $8.24. This upgrade comes after the stock had already surged 75% over the past six months, including a 10% gain in the last week alone.
Wells Fargo analyst Zachary Fadem based the upgrade on management's more optimistic outlook, delivered at a recent Wells Fargo conference, following six quarters of operational and demand-related challenges. The firm anticipates an improvement in Sweetgreen's fundamentals in the coming periods, with comparable sales expected to turn positive in fiscal 2027. The $11 price target values Sweetgreen at 18 times its fiscal 2028 EBITDA, plus an additional $2 per share for its stake in Wonder.
The restaurant chain had previously faced headwinds, including a 6.2% decline in same-store sales for the second quarter, missing the consensus estimate of a 4.0% decline, and an adjusted EBITDA of negative $0.2 million, below the anticipated $6.2 million. These challenges were exacerbated by a Cyclospora outbreak, which, despite Sweetgreen not being directly implicated, caused its stock to drop by 26% in four days in July 2026. Other analysts had differing views, with KeyBanc upgrading to Overweight with a $9.00 price target, while DA Davidson lowered its price target to $5.50 with a Neutral rating, and UBS adjusted its price target to $6.50, maintaining a Neutral rating.
