Freedom Capital bullish on restaurant stocks Dutch Bros and El Pollo Loco

Investing.com -- Freedom Capital Markets initiated coverage of five restaurant companies on Wednesday, assigning Buy ratings to Dutch Bros, First Watch Restaurant Group and El Pollo Loco while launching coverage of CAVA Group and Kura Sushi USA at Hold.

Analyst Lynne Collier initiated Dutch Bros with a $95 price target, implying approximately 33% upside. Collier cited the company's "unique culture, significant white space opportunity, industry-leading cash-on-cash returns and upcoming top-line catalysts including the roll-out of food."

First Watch Restaurant Group received a Buy rating and $17 price target, representing 31% upside. Collier described First Watch as "the emerging leader in the better breakfast category with excellent returns and a long runway of growth ahead," adding that a recent pullback has created an attractive entry point.

El Pollo Loco was initiated at Buy with a $22 price target, also implying 33% upside. Collier called it "an under-the-radar name with relatively new leadership that is executing on a turnaround strategy with improving" same-store sales and accelerating unit growth.

On CAVA Group, Collier launched coverage at Hold with a $95 price target, citing rich valuation at 44.2 times next-twelve-month EV/EBITDA as a reason to await a better entry point despite the company's strong fundamentals.

Kura Sushi USA was also initiated at Hold with a $68 price target, with Collier flagging limited comp predictability and balanced risk/reward at approximately 22 times NTM EV/EBITDA.

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