FWRG Stock Forecast & Price Target

First Watch Restaurant Group Inc. demonstrated solid financial performance in the fourth quarter of 2024, reporting total revenues of $263.3 million, marking a 7.6% year-over-year increase, despite a slight decline in same-store sales. The company's EBITDA rose to $155.0 million, reflecting efficient management and lower-than-expected general and administrative expenses, which aids in maintaining a favorable financial outlook. Furthermore, with positive same-store sales guidance and improvements in traffic trends, especially in-restaurant dining, First Watch is strategically positioned for continued growth driven by enhanced marketing and targeted digital strategies.

First Watch Restaurant Group Inc. is experiencing fundamental challenges that contribute to a negative outlook on its stock, primarily driven by declining restaurant-level margins, which fell by approximately 30 basis points year-over-year to 20.3% in 4Q24. The company anticipates a significant decrease in adjusted EBITDA for 1Q25, projected to be around $4 million lower than the previous year, exacerbated by rising commodity costs, labor inflation, and the financial drag from new units that typically underperform initial sales expectations. Additionally, the broader macroeconomic conditions pose risks to the company's ability to achieve its sales targets, with potential pressures on same-store sales and inflationary pressures on key ingredients indicating a tough operating environment ahead.