Analyst Reactions and Outlook
Yum! Brands, Inc. (YUM) released its second-quarter earnings results on Tuesday before the market opened. The company's performance and future prospects drew mixed reactions from analysts.
Analyst Christine Cho maintained a Neutral rating on Yum! Brands with a price target of $150. While Cho revised the EBITDA forecasts for FY24, FY25, and FY26 slightly downwards, she noted that reduced general and administrative expenses mitigated the impact.
Analyst Brian Mullan also maintained a Neutral rating on Yum! Brands, but with a price target of $140. Mullan acknowledged that the top line in the second half of the year would be weaker than initially anticipated. However, he expects sequential improvement in same-store sales as the year progresses. Additionally, Mullan highlighted the company's efforts to reduce G&A expenses, which should support its operating profit outlook.
Analyst Andrew Strelzik maintained a Market Perform rating on Yum! Brands with a price target of $135. Strelzik expects the company to report FY24 revenues of $7.600 billion and FY25 revenues of $8.093 billion.
Overall, analysts anticipate minimal changes to consensus-adjusted EPS estimates for 2024 through 2026. Any potential reductions in sales are expected to be balanced by lower G&A expenses. While analysts remain optimistic about Yum! Brands' long-term fundamentals, some currently prefer other global fast-food peers such as Domino's Pizza Inc (DPZ), McDonald's Corporation (MCD), and Restaurant Brands International Inc. (QSR).
As of Wednesday, YUM shares were trading lower by 0.38% at $136.33.