Why Sweetgreen (SG) Stock is Falling Today

Sweetgreen (SG) is sinking 6.6% today after Morgan Stanley analyst Brian Harbour significantly reduced his price target on SG stock. On the other hand, Citi upgraded the name to Buy earlier this month.

Sweetgreen owns and operates restaurants that specialize in serving salads.

A close-up image of a colorful salad platter with toppings and dressings.

Morgan Stanley’s Target Cut and the Reason for It

Morgan Stanley’s Brian Harbour lowered his price target on SG to $28 from $32 while keeping an Equal Weight rating on the shares. The analyst has become less bullish on the restaurant sector as he expects the space to rebound at a slow pace this year.

Citi’s Upgraded SG Earlier This Month

On Jan. 10, Citi raised its rating on SG to Buy from Neutral. The bank is upbeat on the company’s remodeling of its restaurants. Given the latter initiative and the firm’s planned addition of new restaurants, Citi expects the profitability of the company’s stores to rise about 15% by 2029.

What’s more, Citi believes that Sweetgreen’s discounted cash flow valuation will increase by almost 50% by 2029.

Finally, the bank contends that the company’s pricing initiatives will make investors more bullish about SG.

Citi increased its price target on the name to $49 from $44.

The Recent Price Action of SG Stock

In the last month, SG has fallen 5.5%, while it’s down 15% in the last three months.

While we acknowledge the potential of SG, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.