Scotiabank assumes coverage on Restaurant Brands stock with neutral view

Scotiabank (TSX:BNS) assumed coverage on Restaurant Brands International (NYSE:QSR) with a Sector Perform rating and a $75.00 price target on Wednesday. According to InvestingPro data, analyst targets for QSR range from $62 to $93, with the company currently trading at a P/E ratio of 22.5x.

The research firm cited the company’s highly franchised structure, potential benefits from consumer trade-down, and below-average valuation as factors limiting downside risk for the stock.

Scotiabank noted that Restaurant Brands has relatively lower U.S. exposure compared to peers, potential to benefit from the "Buy Canadian" theme, and strong growth in higher-sales-volume markets.

The firm pointed out challenges including moderated unit growth and reliance on general and administrative cuts and the end of investments in the Burger King advertising fund to achieve double-digit earnings per share growth.

While Scotiabank expects Restaurant Brands to outperform other restaurant stocks, it cautioned that the restaurant subsector may lack catalysts in what it described as a tough promotional environment through 2025.

In other recent news, Restaurant Brands International Inc. reported its first-quarter earnings, which did not meet market expectations. Despite this, KeyBanc Capital Markets maintained its Overweight rating on the stock, projecting adjusted operating income growth of 8% or more by 2025. JPMorgan also adjusted its price target for the company’s shares from $78.00 to $80.00, maintaining an Overweight rating. The firm noted mixed comparable sales figures for Burger King and Tim Hortons but emphasized the company’s effective cost management strategies.

Additionally, Restaurant Brands International issued a warning to shareholders about an unsolicited mini-tender offer from New York Stock and Bond LLC, which is priced significantly below market value. The company advised shareholders against accepting the offer, highlighting regulatory concerns associated with mini-tender offers. In corporate governance news, all nominees for the company’s Board of Directors were re-elected at the annual shareholders meeting, with strong support from voters.

Restaurant Brands International also released its annual "Restaurant Brands for Good" report, detailing its sustainability and corporate responsibility efforts. The report includes initiatives such as sourcing ingredients sustainably and reducing the company’s carbon footprint. These developments reflect the company’s ongoing strategies to align business practices with social and environmental goals.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.