This week, the value of Sweetgreen shares decreased by 10%.
Sweetgreen's stock took a hit this week, plummeting over 10% in value, as per data provided by S&P Global Market Intelligence. The cause? A price target reduction by analyst Brian Harbour from Morgan Stanley. From a value of $32 per share, Harbour slashed it down to $28, yet maintaining his hold recommendation on the shares.
The analyst's decision wasn't based on any Sweetgreen-specific news. Instead, it reflected Harbour's diminished optimism towards the U.S. restaurant sector's growth prospects, anticipating a meager 5% surge compared to 2024's 4% increase.
Before the cut, Sweetgreen's stock had witnessed an impressive rise in 2024, tripling in value. Investors had been drawn to Sweetgreen due to its Infinite Kitchen model, which relied on automating salad-making, promising lower labor costs.
Come 2025, Sweetgreen periodically added Infinite Kitchens to its list of robot salad-chef restaurants, eventually surging from just two in Q2 to five by the next quarter. This ambitious project, loaded with potential, appealed to investors who were ready to take on above-average risks.
Admittedly, the industry outlook remains complex, with an optimistic yet cautious stance from major players like Morgan Stanley. The stock's overall performance, though deterred by the recent price target cut, still retains a positive outlook from the majority of analysts. Their average 12-month price estimation for Sweetgreen stock stands at $38.83, with high and low estimates caped at $49 and $19, respectively.
Furthermore, Sweetgreen's analyst rating stands highly favorable with strong buy and buy recommendations from a majority of experts, indicating investors' confidence in the company's long-term growth prospects.
Despite Harbour's reduced price target, investing in Sweetgreen's stocks might still be an attractive option for investors with a higher risk tolerance, given the majority of analysts' positive outlook and high average 12-month price estimation. The company's impressive growth in Infinite Kitchens and the overall optimistic yet cautious stance from major players like Morgan Stanley could persuade potential investors to allocate money in finance to Sweetgreen's stocks.