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Investing.com - Stephens lowered its price target on Wendy’s (NASDAQ:WEN) stock to $11.00 from $13.00 on Monday, while maintaining an Equal Weight rating following the fast-food chain’s mixed second-quarter results. The stock, currently trading at $10.09, is near its 52-week low of $9.74, with InvestingPro analysis suggesting the company is currently undervalued.
The company reported global same-store sales and unit growth that missed expectations, though adjusted EBITDA and earnings per share came in above consensus. Wendy’s reduced its fiscal year 2025 global systemwide sales guidance for the second consecutive quarter, citing ongoing traffic softness expected through year-end. InvestingPro data shows 17 analysts have revised their earnings downwards for the upcoming period, with analyst price targets ranging from $10.00 to $18.50.
July comparable sales remained under pressure, down 5%-6%, prompting Wendy’s to refocus its strategy around fewer, higher-impact activations across four core pillars: burgers, chicken, Frosty, and beverages. The company is implementing a simplified calendar and increasing digital investment to address these challenges. Despite recent headwinds, Wendy’s maintains a strong dividend yield of 5.55% and has consistently paid dividends for 23 consecutive years.
Despite facing near-term headwinds in a highly competitive quick-service restaurant landscape, Wendy’s reiterated its confidence in achieving 2%-3% net unit growth for fiscal year 2025. The company will need improved execution and better franchisee alignment to regain customer traffic.
Stephens indicated that sustained comparable sales improvement and a return to beat-and-raise execution will be necessary for Wendy’s to re-establish investor confidence.
In other recent news, Wendy’s reported its second-quarter 2025 earnings, revealing an earnings per share of $0.29, which exceeded consensus estimates by $0.04. Despite this earnings beat, the company faced challenges with same-store sales, which fell short of expectations. Several analyst firms have responded to these developments by adjusting their price targets for Wendy’s. Truist Securities lowered its price target to $13, citing missed sales expectations and a reduction in the company’s guidance for the remainder of the year. JPMorgan also reduced its price target to $13, pointing to a deteriorating outlook and a 3.6% decline in U.S. same-store sales. BMO Capital decreased its price target to $12, despite the earnings beat, due to weak comparable store sales. Evercore ISI set its price target at $12 as well, expressing concerns about profitability and the company’s debt-to-EBITDA ratio. Lastly, BTIG reiterated a Neutral rating, noting that while the quarterly results were disappointing, they were not unexpected given broader industry challenges.
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