11:19 AM EDT, 06/18/2025 (MT Newswires) -- Darden Restaurants ( DRI ) is likely to post "strong" Q4 results amid an improvement in the casual dining sector, Morgan Stanley said in an earnings preview report Wednesday.

Relatively strong casual dining trends could be attributed to demographic exposure, value proposition, and "ongoing bankruptcies helping the better-off," Morgan Stanley analysts said. While casual dining is still cyclical, some brands, including Olive Garden ( DRI ), held up well in past cycles, according to the brokerage.

Olive Garden ( DRI ) could be benefitting from delivery, enhanced marketing, product innovation, and easy compares, Morgan Stanley analysts said.

For fiscal 2026, the brokerage said it is modeling EPS of $10.78 compared with $10.64 earlier and a 2.8% growth in same-restaurant-sales, which could be beatable if current tailwinds in casual dining and delivery trends persist, according to the note.

The brokerage said it is modeling Q4 blended same-restaurant sales of 3.9% compared with a prior view of 3.7% growth. It also modeled same-restaurant sales estimates for Oliver Garden and LongHorn Steakhouse at 5.3% and 5.6%, respectively, versus 4.6% and 6.3% earlier.

Morgan Stanley reiterated its overweight rating on the stock and lifted its price target to $235 per share from $215.

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