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Yahoo
04-06-2025
- Business
- Yahoo
Yum! Brands Tipped For 16% Upside As Analyst Points To Strong Unit Growth, AI Investment
Goldman Sachs analyst Christine Cho upgraded Yum! Brands, Inc. (NYSE:YUM) from Neutral to Buy with a price forecast of $167. The analyst asserted that the company demonstrates a best-in-class unit growth trajectory, which stands out compared to most peers who are either below or at the low end of their stated growth algorithms. Furthermore, the analyst highlighted YUM's high franchise mix, at 98% of units, which she expressed builds relative resilience in the analyst also pointed to improved digital integration across YUM's various brands and at the enterprise level, specifically mentioning Byte! by YUM. The analyst said these digital advancements are expected to improve operational efficiency and drive top-line acceleration. Finally, the analyst emphasized Taco Bell U.S.'s sustained value leadership and the significant opportunity to accelerate international growth for the brand. Based on these considerations, the analyst indicated a 16% upside potential to the 12-month price forecast of $167, which she noted compares favorably to the 9% average upside for the rest of their coverage. The analyst revised the EBITDA estimates to $2.90 billion (from $2.91 billion) for FY25, $3.16 billion (from $3.16 billion) for FY26 and $3.43 billion (from $3.44 billion earlier). In April, Yum! Brands reported first-quarter revenue of $1.79 billion, missing the analyst consensus estimate of $1.8 billion. Adjusted EPS of $1.30 beat the analyst consensus of $1.29. The analyst highlighted several trends in the sector, including diverging brand performance, with casual dining showing more resilience year-to-date than fast food. Cho added that investors are increasingly favoring self-help narratives driven by unique traffic/market share catalysts or margin opportunities based on operational efficiency. While commodity/labor costs are relatively stable, tariffs remain a key swing factor for the second half, and companies are reluctant to raise prices given soft consumer sentiment, she said. The analyst sees elevated risk to global restaurant development plans in FY26/27, potentially pushing unit growth below the stated long-term algorithms. Price Action: YUM shares are trading higher by 0.64% to $144.89 at last check Wednesday. Read Next:Image via Shutterstock Date Firm Action From To Feb 2022 Cowen & Co. Upgrades Market Perform Outperform Dec 2021 Barclays Maintains Equal-Weight Dec 2021 Atlantic Equities Upgrades Neutral Overweight View More Analyst Ratings for YUM View the Latest Analyst Ratings UNLOCKED: 5 NEW TRADES EVERY WEEK. Click now to get top trade ideas daily, plus unlimited access to cutting-edge tools and strategies to gain an edge in the markets. Get the latest stock analysis from Benzinga? YUM BRANDS (YUM): Free Stock Analysis Report This article Yum! Brands Tipped For 16% Upside As Analyst Points To Strong Unit Growth, AI Investment originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved.
Yahoo
04-06-2025
- Business
- Yahoo
Goldman Sachs upgrades Yum Brands on strong growth and digital push
-- Goldman Sachs upgraded Yum Brands to 'Buy' from 'Neutral,' saying the company is better placed than its peers to grow and handle challenges in the restaurant industry. The brokerage pointed to Yum's steady pace of opening new restaurants, which has held up better than many rivals. About 98% of its outlets are franchised, which helps the company stay more stable when costs rise. Goldman also said Yum's investment in digital tools, including a system called Byte! is helping the company work more efficiently and boost sales across its KFC, Taco Bell and Pizza Hut brands. Taco Bell's low-cost menu remains a draw for U.S. customers, and Goldman sees more room for Yum to grow internationally. The firm raised its 12-month price target to $167, implying a 16% gain from current levels. Goldman said investors are now focusing on companies that can grow through changes they make themselves, such as better menus or operations, rather than relying only on a strong economy. In that group, Yum stands out. The analysts at Goldman also flagged risks for the broader industry, including possible tariffs and slower restaurant openings in global markets in the next couple of years. Other companies Goldman favors include Chipotle (NYSE:CMG), Domino's, Shake Shack (NYSE:SHAK) and Wingstop (NASDAQ:WING), which it says are either gaining market share or improving their operations. Related articles Goldman Sachs upgrades Yum Brands on strong growth and digital push Dubai's FIVE Hotels mulls IPO in London or New York Goldman Sachs upgrades Brazil's XP, cuts rating on B3 on shifting risk-reward Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
