Goldman Sachs turned from a bear to a bull on Yum Brands on the firm's view the restaurant company's highly-franchised model provides relative insulation from macro-volatility. Analysis by Goldman Sachs of market-by-market growth across YUM’s brands suggests the fast-food operator can drive unit growth ahead of its long-term algorithm for 4% to 5% for the next two years.
The firm upped earnings estimates on Yum Brands ( NYSE: YUM ) for 2022, 2023 and 2024 on the expectations that sales will grow as global markets improve.
Analyst Jared Garber: "Over the last 3 years, YUM has also acquired several digital/technology companies that are helping to drive both in-restaurant operational improvements as well as more targeted marketing optionality,” he said. “We view these investments as a winning formula for continued unit growth and SSS growth, while helping to improve franchisee operations and profits, and helping to drive YUM’s platform business share-growth opportunity."
Goldman Sachs upgraded YUM to a Buy rating after having it slotted at Sell and increased its price target to $135 vs. the 52-week trading range of $108.35 to $139.85.
Shares of YUM rose 2.01% premarket to $120.53.
Yum Brands ( YUM ) is expected to post earnings during the first week of August. See consensus estimates.
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Yum Brands gains after attracting two-notch upgrade from Goldman Sachs