Goldman Sachs lowers Yum China stock price target to $53 on margin outlook

Investing.com - Goldman Sachs has lowered its price target on Yum China Holdings (NYSE:YUMC) to $53.00 from $57.00 while maintaining a Buy rating ahead of the company’s third-quarter earnings report due November 4. InvestingPro analysis suggests the stock is currently undervalued, with shares trading near their 52-week low of $41.00.

The investment bank forecasts Yum China will report 4.0% year-over-year sales growth, 5.6% restaurant profits growth, and 9.1% operating profits growth for the quarter, all on an FX-neutral basis.

Goldman Sachs expects KFC and Pizza Hut same-store sales growth to reach 1% and 2% respectively year-over-year, remaining stable compared to the second quarter of 2025 and representing 89% and 88% of pre-Covid levels.

The firm anticipates 480 net store openings in the third quarter, an acceleration from the previous quarter, contributing to Goldman’s full-year 2025 estimate of 1,615 net new locations.

Despite projecting restaurant margin expansion of 0.3 percentage points year-over-year and operating profit margin growth of 0.6 percentage points, Goldman Sachs forecasts a 6.6% year-over-year decline in net income due to lower interest income and negative impact from changes in Meituan’s fair value during the quarter.

In other recent news, Yum China Holdings Inc . announced its interim report for the first half of 2025, complying with the listing rules of the Hong Kong Stock Exchange. The company also released its second-quarter earnings for 2025, revealing a slight beat in earnings per share (EPS) against Wall Street expectations. Yum China reported an EPS of $0.58, exceeding the forecast of $0.57. The revenue for the quarter aligned with expectations at $2.79 billion. Despite these positive earnings results, the company’s stock experienced a decline, as investors reacted to future guidance and market conditions. These recent developments highlight Yum China’s ongoing financial activities and market presence.

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