Analysts advised to buy shares of KFC owner. What kind of momentum are they waiting for?
Investment bank Evercore ISI raised its rating on shares of restaurant holding company Yum! Brands, which owns KFC and Taco Bell, from Neutral to Outperform, CNBC reports. Analysts also raised their target price on the stock from $165 to $180, expecting it to be up 20% from the close of trading on Nov. 4.
The revised valuation follows Yum! Brands' announcement that the company is considering strategic options for the troubled Pizza Hut business - up to and including selling it. Getting rid of that brand could give the stock a long-term boost, Evercore analyst David Palmer wrote in a note to clients cited by CNBC.
"With the potential sale of Pizza Hut, we are lowering our 2027 EPS guidance from $7.64 to approximately $7.1. However, we are plotting higher and more stable earnings growth after the separation of the business," Palmer wrote.
According to his calculations, due to low capital intensity and possible proceeds from the deal in the base scenario, the Pizza Hut brand is valued at about $3 billion. For this amount, Yum Brands will be able to accelerate the buyback of its own shares on a significant scale.
Palmer also expressed optimism about the Taco Bell brand, which he said continues to gain market share. "Yum noted that Taco Bell is showing success with cautious but resilient consumers, and sales are growing across all income categories, especially among families and younger audiences," the analyst said. - "We anticipate that despite double-digit beef price increases, the self-managed chain's margins could reach 24% year-to-date.
What other analysts are saying
Overall, according to MarketWatch, Wall Street remains neutral: of the 33 analysts tracking Yum! Brands shares, 20 recommend holding, 12 recommend buying, and one advises selling. The consensus price target is $165.6, up 10.7% from the closing price on Nov. 4.
This article was AI-translated and verified by a human editor
