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Darden Restaurants, which owns Olive Garden, has seen its stock rise nearly 20% this year.

Bloomberg/Daniel Acker

Darden Restaurants is a chain of restaurants owned by Darden.

Last week, the Olive Garden owner announced strong fiscal fourth-quarter earnings, and the praise continues to come in. Darden’s (ticker: DRI) profits were strong enough to garner an upgrade from MKM Partners, putting the restaurant chain owner back in front of the pack. Similarly, Barron’s sees cause to be optimistic about the stock, with author Ben Levisohn recommending it as a buy due to continued consumer momentum in the United States and Darden’s pricing power.

While Darden’s earnings didn’t convince Deutsche Bank analyst Brian Mullan to come off the sidelines, he boosted his price objective on the stock to $152 from $145. “When we take a step back, we see Darden putting on a master lesson for everyone else in terms of how to deal with and exploit a crisis, as well as how to communicate and articulate throughout.” Mullan is impressed by the company’s ability to leverage the epidemic to both strengthen the company’s margin structure and invest in the value proposition of its products, guaranteeing that consumers would continue to favor its brands in the future.

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“To put it another way, one gets the impression that if management wanted them to, margins could expand by more than 200 to 250 basis points,” he wrote, adding that Darden “knows that investing in the guest [experience] now is the right thing to do for the long-term…management is doing a great job with striking the right balance.” Darden’s stock is trading less than 10% away from Mullan’s revised price target, which isn’t enough to warrant an upgrade from the analyst, who kept his Hold rating. Mullan stated that his stock bias is bullish, and that he agrees with the bull thesis that the stock may continue to rise. On Monday, though, this is not the case. Darden’s stock fell to $141 in recent trading. Shares are up 18.4% year to date and 84 percent in the last year. The average analyst price objective for the company tracked by FactSet is $161.04. Teresa Rivas may be reached at teresa.rivas@barrons.com.
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