What happened
Shares of Mediterranean-style restaurant chain Cava Group (CAVA -0.64%) jumped again on Monday, continuing its strong performance since the company went public last month. As of 2:10 p.m. ET, Cava stock was up 11%.
So what
Cava stock is going up today because of all the analysts who are initiating coverage on the company. For context, Wall Street firms follow public companies and give investing advice to their clients.
Cava only had its initial public offering (IPO) on June 15, so many analysts hadn't made any official comments yet. But that's starting to change. According to TipRanks, eight analysts have initiated coverage on Cava stock within the last 24 hours, six of whom said the stock was a buy.
It's common for IPO stocks to garner a lot of attention. Consumer-facing companies like restaurant stocks also have easily understandable businesses, which can hold greater appeal among everyday investors. And with all of the analysts giving upbeat commentary about its prospects, enthusiasm for Cava stock is still building, sending the stock higher.
Now what
In my opinion, investors need to be more cautious in times of heightened enthusiasm. Cava Group stock now trades at double the price its IPO priced at less than one month ago. And investment bankers have incentives to get high prices. Trading this far above the starting price this soon makes me wonder if the stock isn't due for a pullback in the near to medium term.
