Darden Restaurants (NYSE:DRI) was the subject of a bullish analyst report on Tuesday morning. The parent company of several popular restaurant chains received a buy rating from analyst firm MKM Partners. MKM analyst Brett Levy also pegged Darden's target price at $90 per share. That's up from an earlier projection of $62 per share and 19% above Monday's closing price.
Levy based this upgrade on a fresh business update from Darden. The company reported a 49% year-over-year decline in same-store sales for the week ending on May 17, up from a 60% drop three weeks earlier. The casual-dining flagships Olive Garden and LongHorn Steakhouse drove this improvement while the company's fine dining restaurants lagged behind.
The analyst was encouraged by these stabilizing trends. Darden is a "best-in-class full service restaurant company" in Levy's view, and he expects the company to gain market share from weaker competitors across the COVID-19 crisis.
Darden also noted that its ongoing cash burn has slowed to approximately $10 million per week, down from $20 million per week in April.
The stock rose less than 3% on the news. Darden's share prices have tripled since bottoming out at a multi-year low of $26.15 in March but investors are still aching from a 37% price drop over the last quarter.