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Olive Garden parent takes a COVID-related hit in key markets but here’s why analysts are upbeat

THE RATINGS GAME

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Darden Restaurants

Olive Garden and other pieces of the Darden Restaurants Inc. business have taken a hit from the coronavirus pandemic, but upbeat analyst groups are raising their price targets after the company took measures, like simplifying menus, in order to adjust.

Darden (DRI) reported fiscal first-quarter sales of $1.53 billion, down from $2.13 billion last year and just below the FactSet consensus for $1.56 billion. Olive Garden same-restaurant sales were down 21.1%. Sales at Olive Garden were down 27.7% to $788.2 million, sales at Longhorn Steakhouse fell 16.3% to $376.8 million, and fine dining sales sank 38.9% to $83.1 million.

“Overall, capacity restrictions continue to limit their top-line sales, particularly in key high-volume markets like California and New Jersey where dining rooms were closed for the majority of the quarter,” said Chief Executive Eugene Lee on the earnings call, according to FactSet.

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