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Investing.com - Evercore ISI reduced its price target on Wendy’s (NASDAQ:WEN) to $12.00 from $14.00 on Monday, while maintaining an "In Line" rating on the fast-food chain’s stock. The stock, currently trading at $10.09, sits near its 52-week low of $9.74, having declined over 27% in the past six months. According to InvestingPro data, 17 analysts have recently revised their earnings estimates downward.
The firm cited deteriorating systemwide cash flow and balance sheet concerns for both franchisees and the company, noting Wendy’s current debt-to-EBITDA ratio stands at approximately 5.9x for 2025 estimates, including finance leases. InvestingPro analysis shows a total debt-to-capital ratio of 0.68, though the company maintains a healthy current ratio of 1.45, indicating sufficient liquidity to meet short-term obligations.
Evercore ISI identified high food costs as a key challenge, estimating Wendy’s costs exceed 28% compared to under 22% for McDonald’s (NYSE:MCD), excluding paper costs, while the chain appears to lack appropriate consumer credit in both quality and value offerings.
The research firm lowered its second-half 2025 U.S. same-store sales forecast from -1% to -7%, compared to consensus estimates of -2%, and reduced its 2025 and 2026 earnings per share estimates by an average of 10%.
Despite Wendy’s stock trading at what Evercore considers an inexpensive 11x 2025 price-to-earnings ratio, the firm’s new $12 price target represents 13.5x its 2026 estimated earnings per share, as analysts await more information about the company’s strategy and the hiring of what they describe as a needed "marketing-oriented CEO." The stock currently offers a notable 5.55% dividend yield, and detailed analysis available through InvestingPro suggests the stock may be undervalued at current levels, with additional insights available in the comprehensive Pro Research Report.
In other recent news, Wendy’s has faced a series of challenges, reflected in its latest quarterly earnings results. Analysts from BTIG maintained a Neutral rating on Wendy’s stock, citing disappointing but expected results due to difficult consumer conditions and uneven trends in July. Barclays (LON:BARC) lowered its price target for Wendy’s to $11, maintaining an Equalweight rating, and highlighted ongoing headwinds that have impacted the first half of 2025 more severely than the broader quick-service restaurant sector. TD Cowen also reduced its price target to $11, expressing concerns about the tough industry environment and difficult year-over-year comparisons anticipated in the latter half of 2025.
Evercore ISI kept its In Line rating on Wendy’s with a $14 price target, emphasizing the need for exceptional execution in marketing and innovation in the current fast-food landscape. UBS, ahead of Wendy’s second-quarter earnings report, lowered its price target to $11 due to sales pressures and a challenging macro environment affecting growth visibility for 2025. These recent developments indicate a general consensus among analysts about the difficulties Wendy’s is facing in the current market.
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