CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:
We cut our 12-month target to $130 from $147, 22.3x our 2024 EPS, below YUM’s five-year average forward P/E, reflecting revenue growth risks. We raise our 2023 EPS view to $5.30 from $5.24 and FY 25’s to $5.84 from $5.72. YUM posted Q3 adj-EPS of $1.44, $0.17 above consensus. Revenue of $1,708M (+4.1% Y/Y) was $64M below consensus. Adjusted operating income grew 16.4% Y/Y to $619M vs. $588M consensus, with margin widening to 36.2%. YUM’s comp sales grew 9.0% vs. 4.5% consensus. Taco Bell in the U.S. was a bright spot, with comp sales up 4% Q/Q and comp transaction growth seen across income groups. We’re also positive on YUM’s margins, given its plans for new kiosks (higher average check), menu items (chicken nuggets at KFC), and AI-enabled platforms. However, industry-wide concerns persist due to cost of living pressures and lower inflation. Further, we remain cautious due to YUM’s exposure to China, where comp sales fell meaningfully at KFC (-16 pts Q/Q to +16% Y/Y) and Pizza Hut (-11 pts Q/Q to +14% Y/Y).