BMO Capital Raises Texas Roadhouse Price Target to $170 from $165, Keeps Market Perform Rating

BMO Capital has raised its price target on Texas Roadhouse (TXRH) to $170 from $165, citing unfavorable restaurant margins in Q2 earnings. The company also updated its 2025 guidance unfavorably for food inflation to 5% from 4%. BMO keeps a Market Perform rating on the shares.

BMO Capital has raised its price target for Texas Roadhouse (TXRH) to $170 from $165, according to a recent research note [1]. The firm maintains a Market Perform rating on the shares despite the company's Q2 earnings missing consensus by $0.05. The analyst attributed the miss to unfavorable restaurant margins. Additionally, Texas Roadhouse has updated its 2025 guidance for food inflation to 5% from 4%, citing beef and labor costs.

Texas Roadhouse reported 12.7% revenue growth to $1.51 billion in Q2 2025, driven by strong core operations and $1.5 billion in restaurant sales [2]. Net income rose 2.9% to $126.69 million, with EPS growing by 3.9% to $1.87. The company's historical performance shows a 96.79% return on the stock post-revenue growth quarters, outperforming benchmarks by 47.39% over three years.

CEO Jerry Morgan highlighted 5% store growth and the milestone opening of its 800th restaurant. He projected 5% commodity cost inflation for FY2025 and emphasized the company's commitment to operational excellence. For FY2025, Texas Roadhouse anticipates a 5% commodity cost inflation rate, including tariffs, and a 4% wage and labor inflation rate, with an effective income tax rate of 15%.

Despite the earnings miss and increased inflation guidance, the stock price of Texas Roadhouse edged up 0.06% on the latest trading day but declined 0.06% over the most recent full trading week and 1.72% month-to-date.

References:
[1] https://www.tipranks.com/news/the-fly/texas-roadhouse-price-target-raised-to-170-from-165-at-bmo-capital-thefly
[2] https://www.ainvest.com/news/texas-roadhouse-2025-q2-earnings-net-income-grows-2-9-2508/