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Investing.com - Loop Capital reduced its price target on Wendy’s (NASDAQ:WEN) to $16.00 from $21.00 on Wednesday, while maintaining a Buy rating on the fast-food chain’s stock. The stock, currently trading at $10.51, has declined over 27% in the past six months and is hovering near its 52-week low, according to InvestingPro data.
The price target adjustment follows franchisee checks indicating Wendy’s U.S. same-store sales declined 2.5-3.0% during the last four weeks of the second quarter and continued at that pace during the first two weeks of the third quarter. Despite these challenges, the company maintains a healthy 5.33% dividend yield and trades at a P/E ratio of 11.23x.
The second-quarter performance aligned with Loop Capital’s estimate of a 2.5% decline and was close to the consensus expectation of a 2.8% drop. However, the early third-quarter trend suggests sales are tracking below previous projections.
On a two-year stacked basis, the current sales decline of 2.5-3.0% translates to a drop of 1.8-2.3%, which Loop Capital notes is in line with Wendy’s reported two-year stacks of down 2.2% in the first quarter of 2025.
The firm’s revised $16 price target represents approximately 10 times Loop Capital’s 2025 EV/EBITDA estimate for Wendy’s, reflecting concerns about the company’s sales trajectory despite maintaining an overall positive outlook on the stock. InvestingPro subscribers can access 8 additional key tips and a comprehensive analysis of Wendy’s financial health, which is currently rated as FAIR.
In other recent news, Wendy’s Company has announced plans to expand its global footprint by opening 190 new restaurants across Italy and Armenia. The franchise agreements include 170 locations in Italy and 20 in Armenia, with openings expected to begin by mid-2026 and 2030, respectively. This move aligns with Wendy’s strategy to achieve significant international growth. Additionally, Wendy’s is facing leadership challenges as CEO Kirk Tanner announced his departure, with CFO Ken Cook stepping in as interim chief executive. Truist Securities has lowered its price target for Wendy’s to $14.00, citing weak second-quarter U.S. same-store sales and operational risks associated with the CEO’s exit. Despite this, Truist maintains a Buy rating, expecting future menu innovations to boost sales. Meanwhile, Bernstein has reiterated its Market Perform rating, expressing concerns over the company’s organizational stability. BTIG has also maintained a Neutral rating, highlighting skepticism about Wendy’s long-term growth prospects amid the leadership transition. At the company’s recent annual meeting, shareholders elected all director nominees and ratified Deloitte & Touche LLP as the independent auditor for 2025, while rejecting three stockholder proposals focused on environmental and social governance.
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