Cava Group Inc "Upgrade to Buy: A Growth Oasis In Difficult Environment" (Buy)

Research evidence excerpt

Cava Group Inc "Upgrade to Buy: A Growth Oasis In Difficult Environment" (Buy)

a premium valuation, in our view. We believe multiple drivers exist to support at

least LSD-MSD sss long-term, while exposure to a higher income consumer could provide greater

resiliency in a difficult macro backdrop. Strong new unit economics, sizable new open sales volumes

and a significant store TAM support our view that CAVA should maintain among industry leading unit

growth. Solid positioning and strength of operations & results should support a sizable LT growth

runway for the brand, while a net cash position and positive FCF generation highlight balance sheet

stability. At ~35x '27E EBITDA, we believe shares currently represent an attractive buying opportunity,

w/ strong sss momentum and solid unit growth supporting our Buy rating.

EVIDENCE We are confident CAVA will reach its store development target given: i) attractive unit economics,

including 40%+ targeted year 2 cash-on-cash returns, and ii) significant whitespace indicated by our

analysis of more developed fast casual brands (450+ CAVA units vs ~4.1K CMG and ~2.2K Panera).

Additionally, UBS Evidence Lab datasets support a solid sss outlook, given: 1) Respondents citing a

loyalty program and 'new items on the food menu' as key factors driving visits. 2) Positive and above

peer avg net visit intent over the NTM. 3) Strength in frequently cited brand characteristics, including:

'fresh & wholesome food' and 'high quality food'.

WHAT´S PRICED IN? Shares reflect expectations for solid growth over the coming yrs, incl EBITDA forecasted to grow at

least 25% annually. Sell-side Consensus forecasts 6.9% '26 sss and ~4% 3-yr avg sss through '29; a

~16% unit CAGR; and 27% EBITDA CAGR through '29.Please

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