UBS has adjusted its valuation view of The Cheesecake Factory, raising its price target to $53 from $50 but leaving its rating unchanged at Sell. The stock is trading notably above UBS's revised target at $61.19 per share, with year-to-date gains of 24%.
The firm pointed to improved margin performance in the company’s fiscal fourth quarter as the central reason for the target revision, while noting that industry pressures contributed to a miss on comparable sales. UBS said trends appeared to strengthen entering the first quarter of 2026.
UBS characterized the chain’s guidance for the first quarter of 2026 - revenue between $955 million and $970 million - as possibly conservative. The bank also indicated that the company’s full-year 2026 revenue projection of roughly $3.9 billion and a net income margin near 5% seem attainable under current conditions.
Over the last twelve months the company reported $3.75 billion in revenue, and it carries a market capitalization of $3.11 billion with a price-to-earnings ratio of 19.31. Analysis from InvestingPro places CAKE on a list of Most Overvalued companies relative to its Fair Value, and InvestingPro Tips note the company was profitable over the past twelve months.
Management reiterated plans to develop as many as 26 new units in 2026, a pace UBS described as feasible given recent development activity. The Cheesecake Factory’s same-store sales were weaker in the fourth quarter, although the company reported an encouraging start to the first quarter in January.
One of the company’s other concepts, North Italia, saw softer results in the quarter: same-store sales declined 4%, including a 6% drop in traffic. Management attributed those declines to macroeconomic headwinds, some cannibalization, and lingering effects from Los Angeles-area fires. The company projects full-year same-store sales for North Italia to improve to flat or slightly positive.
Financial results for the fourth quarter of fiscal 2025 showed adjusted earnings per share of $1.00, narrowly above the $0.99 analysts had expected. Revenue for the quarter reached $961.56 million, ahead of the $949.61 million consensus and representing a 4.4% increase from $921.0 million in the same quarter a year earlier. Despite the top-line beat, comparable-restaurant sales at Cheesecake Factory locations were down 2.2% year-over-year, and North Italia same-store sales were down 4.0%.
Separately, Stephens recently moved its rating on the stock from Overweight to Equal Weight while keeping a $65.00 price target in place. That downgrade was attributed to valuation concerns, even as Stephens acknowledged improved restaurant-level margin execution. Taken together, these analyst moves and company disclosures underline the dual nature of the backdrop: better margin control on one hand, and ongoing challenges in restoring traffic and comparable sales on the other.
Context for markets and investors
The mix of margin improvement and soft comparable-sales trends has implications across the consumer discretionary and restaurant sectors. Margin gains support near-term profitability metrics, while slower traffic and comp weakness raise questions about demand sustainability at existing locations. Development plans for new units also intersect with real-estate and capital allocation considerations for the company.