12:13 PM EDT, 07/17/2024 (MT Newswires) -- Sweetgreen ( SG ) is likely to post over 15% revenue growth in the next three years, with kitchen automation, loyalty programs and menu innovations expected to boost same-store sales and key menu features providing a strong competitive edge, UBS Securities said in a note Wednesday.

UBS said its growth expectations reflect nearly 40% cash-on-cash returns on traditional units, solid new open performance in newer markets, and significant whitespace, with a targeted 1,000 restaurant total addressable market supported by the rollout of Infinite Kitchens.

"We're particularly encouraged by the initial [1,000] locations which maintain margins of 28% vs a system average or 18%, including a 700 bps benefit to labor and other efficiencies," analysts said in the note.

UBS said it believes the company is nearing positive EBITDA profitability and has substantial earnings potential from automated store formats besides an increasing clarity on sustainable same-store sales and unit growth drivers.

UBS initiated coverage of Sweetgreen's ( SG ) stock with a buy rating and a price target of $31.

Shares of the company were down 6.5% in recent trading.

Price: 25.07, Change: -1.74, Percent Change: -6.49