Darden Restaurants: Market Experts Adjust Targets Amid Cost Pressures

Shares of Darden Restaurants, the parent company of popular chains like Olive Garden and Longhorn Steakhouse, are under scrutiny as market strategists revise their price objectives. While the company continues to post solid sales growth, increasing expenses are prompting a reassessment of near-term profitability. The central question for investors is whether the firm's expansion narrative can outweigh the immediate strain on its margins.

This week, analysts at two prominent firms, Raymond James and Evercore ISI, lowered their price targets for Darden's stock. Both institutions, however, maintained their positive "Outperform" ratings on the equity.

The adjustments were primarily driven by rising commodity costs, with beef prices cited as a significant factor. On Thursday, Raymond James reduced its target to $200 from $210. Interestingly, the firm's researchers simultaneously raised their same-restaurant sales growth forecast for the Longhorn Steakhouse division to 5.5%. Their earnings per share estimate for the current quarter was trimmed slightly below the broader market consensus, reflecting the anticipated impact of higher input costs on operating margins.

Should investors sell immediately? Or is it worth buying Darden Restaurants?

Earlier in the week, Evercore ISI made a similar move, cutting its target price to $225 from $240. These revisions follow Darden's latest quarterly report, which showed revenue climbing 10.4% year-over-year, while earnings per share came in just below expectations.

Balancing Long-Term Confidence with Short-Term Headwinds

Despite these near-term pressures, the company's fundamental outlook appears unchanged. Management has reaffirmed its full-year guidance, projecting fiscal 2026 earnings per share in the range of $10.50 to $10.70. Strong institutional ownership, with approximately 94% of shares held by major investors, signals sustained long-term confidence in the business model. Furthermore, the stock offers an attractive income component, with a dividend yield hovering around 3.3%.

Currently trading near €151.55, the share price sits well below the newly adjusted analyst targets and has lost ground since the start of the year. The upcoming quarterly results, scheduled for release on March 19, 2026, will be a key indicator of whether the restaurant group can successfully convert its robust sales growth into more stable and resilient profits.