11:25 AM EDT, 09/20/2024 (MT Newswires) -- Darden Restaurants' ( DRI ) fiscal Q1 "softness" is not surprising given the uncertain consumer environment but the company is expected to keep gaining market share, Wedbush Securities said in a note Friday.

Analysts, including Nick Setyan, said the company's fiscal Q1 earnings per share were $1.75, below the expected $1.83, due to weaker same-store sales, or SSS, growth of -1.1%. Notably, Olive Garden ( DRI ) saw a decline in SSS growth, while LongHorn had positive growth. The analysts added that Darden reiterating its revenue guidance for fiscal 2025 is not surprising.

Although the company did not provide specific guidance for fiscal Q2, management noted that SSS growth had improved in August and early September.

Looking ahead, Darden management expects to increase ad spending by about 20 basis points in fiscal 2025. The plan is to emphasize pricing in its marketing and reintroduce popular dishes at Olive Garden ( DRI ) and add new options at LongHorn.

In addition, a new partnership with Uber ( UBER ) for on-demand delivery will be tested at select Olive Garden ( DRI ) locations and will expand further before the holiday season, according to the note.

The analysts said they are cutting their Olive Garden SSS growth forecast for fiscal Q2 from 1.5% to 1% and for the fiscal year from 1.2% to 0.5%. Meanwhile, they are raising their LongHorn Steakhouse SSS growth estimate for fiscal 2 from 3% to 3.5% and for the fiscal year from 3.3% to 3.6%. They also lowered their fiscal 2025 earnings per share guidance to $9.50 from $9.54, and the fiscal 2026 estimate to $10.32 from $10.37.

Wedbush raised its price target on Darden Restaurants ( DRI ) to $200 from $170 while keeping its outperform rating.

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