Shares of the Mediterranean fast-casual restaurant chain operator Cava (NYSE:CAVA) closed about 7.6% lower on Thursday, June 6. Moreover, CAVA stock fell 0.5% in after-hours trading. This notable drop came after Artal International S.C.A., a major shareholder and more-than-10% owner in CAVA, decided to sell 3 million shares after converting Series E preferred stock into common stock.
According to TipRanks’ Insider Trading Activity tool, Artal International sold 2 million shares in March and 3.5 million shares in February 2024.
Cava Stock: Valuation A Concern
CAVA stock is up about 98% year-to-date. This massive run in CAVA stock comes amid macro uncertainty, which continues to pose challenges for restaurant operators. Nonetheless, its value proposition and focus on growing its geographical footprint significantly boosted its financials and share price.
Given the significant appreciation in its share price, CAVA appears unattractive on the valuation front, according to analysts. As per the TipRanks Stock Analysis tool, “Bulls Say, Bears Say,” analysts bearish on CAVA see valuation as a concern and suggest a cautious approach.
On June 3, J.P. Morgan analyst John Ivankoe downgraded Cava stock to Hold from Buy, citing the company’s expensive valuation. Ivankoe, who has a 75% success rate on CAVA stock, maintained the price target of $77, which implies 9.45% downside potential from current levels.
Insider Trading Signal Negative for CAVA Stock
The Insider Confidence Signal is Negative for CAVA stock. Corporate Insiders sold CAVA shares worth $221.5M in the last three months.
What is the Price Target for CAVA?
The analysts’ average price target for CAVA stock is $87.15, implying a limited upside potential of 2.48% from current levels.
At the same time, Wall Street analysts are cautiously optimistic about CAVA stock. It has seven Buys and six hold recommendations for a Moderate Buy consensus rating.
