UBS highlighted Yum Brands ( NYSE: YUM ) as a top pick in the consumer sector with the stock said to feature defensive attributes that should prove resilient and with growth seen accelerating. The restaurant chain operator is expected to remain resilient in a difficult macro given strong everyday value positioning and compelling promo opportunities across brands.
In reiterating the bull call, the firm also leaned on its proprietary QSR survey that indicated strong brand perceptions and improvements in customer satisfaction scores for YUM across key metrics.
Analyst Dennis Geiger: "We view YUM shares as increasingly attractive given a solid growth algorithm, defensive characteristics, and underperformance to peers YTD, w/ a now sizable valuation discount to MCD (~2.5x discount on '23E P/E vs. 5-yr ~1x avg premium)."
Looking ahead, Geiger and team think catalysts exist to help YUM narrow the valuation gap.
UBS has a Buy rating on Yum Brands ( YUM ) and price target of $148.
Dig into the valuation metrics on Yum Brands.
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Yum Brands is a top restaurant pick at UBS with the brands scoring high