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Investing.com - RBC Capital upgraded Collins Foods Ltd. (ASX:CKF) from Sector Perform to Outperform and raised its price target to AUD11.70 from AUD8.50.
The upgrade follows Collins Foods’ trading update showing 6.7% sales growth in the first 18 weeks, exceeding RBC Capital’s estimate of 5.54%.
RBC Capital noted that Collins Foods’ Australian operations have benefited from effective promotions and menu innovation, while its German business is improving its marketing strategy following Yum!’s reacquisition of master franchise rights in December 2024.
Despite Collins Foods maintaining its FY26 NPAT growth guidance, RBC Capital expressed optimism about the company’s earnings growth potential, citing top-line growth and gross margin improvements as key drivers.
The investment firm justified its upgraded outlook by noting that Collins Foods is currently trading in line with its 5-year average P/E ratio despite improved earnings prospects.
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