Sweetgreen shares climbed after Wells Fargo shifted its call from equal-weight to overweight, led by analyst Anthony Trainor. By 10 a.m. in New York, the stock was up as much as 6.8%, reaching its strongest intraday price since the mid July outbreak.
That move wiped away part of a drop tied to a multistate cyclospora outbreak that sickened tens of thousands and scared diners off leafy greens. The Los Angeles-based company saw its market value shrink by more than a quarter over the summer on worries that demand for fresh produce would fade.
Trainor set an $11 price target, the highest among covering firms, which points to almost a 34% rise versus Friday's close. He wrote, "Cyclospora is a transitory headwind," adding, "The team has made necessary adjustments," and noted, "Our checks point to a recovery taking hold in September, and we see upside ahead as fundamentals improve and comps ultimately inflect positive in FY27." He also anticipates that by the end of the third quarter, Sweetgreen will be close to its pre-outbreak pattern, with traffic and comps essentially unchanged.
Store visits at Sweetgreen lagged the fast-casual average, according to Placer.ai, and the company cut its annual outlook in August. Sweetgreen has said its supply chain was not impacted by the outbreak. On Sept. 11, the US Centers for Disease Control and Prevention said the outbreak had ended, following a regulatory finding that the source was shredded iceberg lettuce served at Taco Bell.
The rally has not spilled over to the rest of the restaurant space. Yum! Brands is down 8.1% this year, while Chipotle Mexican Grill and Cava Group are both lower by double digits year to date.
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Sweetgreen is up 25% in 2024 and has surged more than 60% from its Aug. 11 low. If Trainor's call is right, exiting Q3 near a pre-outbreak baseline of roughly flat traffic and comps sets the stage for where expectations settle heading into FY27. For everyday investors, the takeaway is simple: perception around food safety can swing demand quickly, and recoveries can move just as fast when those fears fade.
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