FWRG Stock Forecast & Price Target

First Watch Restaurant Group Inc. (FWRG) reported a 4Q24 total revenue of $263.3 million, reflecting a year-over-year increase of 7.6%, despite a slight decline in same-store sales driven by traffic challenges. The company's EBITDA rose to $155.0 million, which surpassed pre-release estimates and indicates strong operational efficiency, supported by effective cost management. Looking ahead, FWRG's positive outlook is reinforced by expectations of low-single-digit same-store sales growth for FY25, enhanced marketing investments, and improvements in in-restaurant dining performance relative to off-premise sales.

The negative outlook on First Watch Restaurant Group Inc. stems from a combination of declining restaurant-level margins and increasing commodity and labor costs, which are expected to adversely affect future adjusted EBITDA. Specifically, 4Q24 margins showed a year-over-year decline and projections for 1Q25 indicate adjusted EBITDA will fall about $4 million short of the previous year due to ongoing pressures from inflation and the impact of new unit openings. Additionally, a challenging macroeconomic environment poses risks to same-store sales, leading to potential underperformance relative to long-term sales growth expectations, further complicating the company's financial outlook.