Sweetgreen (SG) Stock Forecast & Price Target

Sweetgreen Inc's positive outlook is underpinned by a continued expectation of strong top-line growth, which is anticipated to aid its path to profitability through improved scale and the leveraging of fixed corporate costs, leading to enhanced margins over time. The company's restaurant margins, currently at 17.5% for 2023, are projected to grow beyond prior peak levels, driven by average unit volume (AUV) growth and effective sales leverage. Additionally, momentum is supported by improved traffic and successful strategies in menu innovation and marketing, with future growth potential anticipated from Infinite Kitchens and an acceleration of unit growth beyond 2025.

The negative outlook on Sweetgreen's stock is primarily driven by disappointing same-store sales (SSS) performance, which was reported at 190 basis points below expectations for the fourth quarter and 210 basis points below consensus for 2025 guidance. Additionally, external factors such as adverse weather conditions, holiday timing, and recent events in Los Angeles are contributing to a challenging sales environment, particularly impacting Q1 2025, which has led to a downward revision of revenue and EBITDA estimates. Furthermore, the adjustments in the restaurant-level margin, reduced from 21.3% to 20.4%, reflect concerns about the slower growth trajectory in core markets and overall investor sentiment turning negative.