UBS reduced its price target for Sweetgreen Inc (NYSE:SG) to $6.50 from $7.50 while maintaining a Neutral rating on the shares. The stock was trading at $5.79, reflecting a market capitalization of $685 million and a decline of 73% over the trailing 12 months.
The research team at UBS expects fourth-quarter same-store sales to remain under pressure amid ongoing macroeconomic headwinds. UBS indicated investor expectations are for a fourth-quarter same-store sales shortfall relative to consensus, which the bank cited as negative 11.9%.
In explaining its view, UBS pointed to several demand-side and geographic factors. The firm noted softer spending among younger consumers, who account for roughly 30% of Sweetgreen's exposure. It also highlighted significant concentration in markets currently under stress - specifically Los Angeles and cities in the Northeast - which combined represent about 60% of the company's portfolio. Given those dynamics, UBS projects same-store sales in the fourth quarter to show a decline in the low double-digit percentage range.
Looking further ahead to 2026, UBS models same-store sales to be approximately flat, versus consensus estimates of 0.2% growth. The firm expects adjusted EBITDA of $6.3 million for 2026, below the consensus forecast of $7 million. UBS also anticipates management will reiterate development guidance for new units in the range of 15 to 20 locations.
Sweetgreen's trailing-twelve-month results show negative EBITDA of $45.6 million and an overall gross profit margin of 17%, metrics UBS cited when assessing near-term financial flexibility and margin opportunity. The bank signaled it expects sales challenges to persist into 2026 while the company pursues initiatives intended to lift sales momentum and pursue margin and EBITDA improvement.
UBS described the risk/reward as approximately balanced at current levels, acknowledging that Sweetgreen retains long-term levers to drive same-store sales and EBITDA growth even as short-term outcomes remain uncertain. Separately, InvestingPro analysis referenced in the firm report suggests the stock is currently undervalued. Sweetgreen was scheduled to report earnings in three days on February 26.
Corporate developments announced by Sweetgreen were noted alongside the UBS assessment. The company completed the sale of its Spyce business unit to Wonder Group for a total consideration of $186.4 million, comprised of $100 million in cash and Series C Preferred Stock of Wonder valued at $86.4 million. Spyce, which Sweetgreen acquired in 2021, developed the Infinite Kitchen automation technology that Sweetgreen said is in use at more than 20 locations.
In other company-level news, UBS downgraded Sweetgreen from Buy to Neutral, citing concerns around store traffic and a slower sales recovery tied to the same macroeconomic pressures the bank outlined. The report also referenced an adjustment to the company's price target to $7.50.
Leadership changes were also disclosed: Sweetgreen announced that co-founder Nathaniel Ru will retire as Chief Brand Officer effective January 1, 2026. Ru, who has served as a central figure at the company since its founding in 2007, will remain a member of the board after stepping down from his executive role. These items form part of an ongoing set of strategic and leadership transitions within the company.
The UBS note, the company's strategic moves and the approaching earnings date together frame the near-term outlook for Sweetgreen. Investors and market participants will be watching same-store sales trends, updated guidance on unit growth, and management commentary on margin recovery when results are released.