On Tuesday, Argus upgraded Yum! Brands (NYSE:YUM) stock from Hold to Buy, setting a new price target of $155, well above the current price of $133.52. According to InvestingPro data, analyst targets range from $130 to $158, with the stock currently trading near its 52-week low. The upgrade was influenced by strong performance and growth prospects, including solid same-store sales at KFC and Taco Bell, which are expected to positively impact the company’s results in 2025.
Yum! Brands, the parent company of popular fast-food chains KFC, Taco Bell, and Pizza Hut, is expected to see benefits from AI-driven marketing initiatives. These programs aim to retain customers and increase revenue through enhanced consumer engagement across various platforms such as email, social media, and mobile apps.
With a "GOOD" Financial Health score from InvestingPro and projected revenue growth of 7% for FY2024, Yum! Brands has reported higher returns on marketing investments.
The company’s growth strategies also include the implementation of loyalty programs, menu innovations, and new store openings. These initiatives, coupled with a 21-year track record of consistent dividend payments, are part of Yum! Brands’ efforts to maintain a stable earnings base, take advantage of its geographic diversity, and manage its varied business operations effectively.
Argus’ long-term Buy rating reflects confidence in Yum! Brands’ ability to sustain its earnings and capitalize on its broad market presence. The firm’s analysts believe that the company’s strategic measures will contribute to its continued success in the competitive fast-food industry.
In other recent news, Yum! Brands reported a 3% year-over-year profit growth in its third quarter, primarily driven by strong performance at Taco Bell U.S. and KFC International. However, Pizza Hut experienced a slight decline due to competitive pressures. The company expects Q4 core operating profit growth in the mid-to-high single digits, with Taco Bell margins projected at 23% to 24%.
In tandem with its financial performance, Yum! Brands has declared a quarterly dividend of $0.67 per share of common stock, payable in December. The company has also made key leadership changes, with Erica Burkhart’s promotion to Chief Legal Officer and Joe Park’s expanded role in overseeing digital and restaurant technology, as part of its ongoing efforts to sustain growth and capture global market opportunities.
On the analyst front, Bernstein highlighted Chipotle Mexican Grill (NYSE:CMG) and Wingstop (NASDAQ:WING) for their exceptional value propositions and industry outperformance, while Guggenheim maintained a positive outlook on Yum! Brands, raising the stock’s price target to $155.
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