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On Wednesday, TD Cowen adjusted its outlook on Yum! Brands stock (NYSE:YUM), increasing the price target to $164 from the previous $151, while maintaining a Hold rating on the shares. The adjustment comes after the firm’s analyst, Andrew Charles, participated in the Taco Bell Investor Day & Live Mas Event, where Yum! Brands unveiled their long-term objectives.
Yum! Brands, the parent company of Taco Bell, has set a target to achieve sales volumes of $3 million by 2030, a significant rise from the projected $2.2 million in 2024. Additionally, the company aims to roughly double Taco Bell’s segment EBIT from approximately $1 billion by the end of the decade. This ambitious growth plan is backed by a solid first-quarter performance in 2025, with same-store sales (SSS) growth reported at 8%, exceeding industry expectations of 6% and the consensus of 5%. InvestingPro analysis shows the company maintains strong financial health with an overall score of 3.08 (rated as "GREAT"), supported by revenue growth of 6.7% in the last twelve months.
The firm’s positive adjustment of the price target is also influenced by revisions to the estimated earnings per share (EPS) for 2025-2026. Nine analysts have recently revised their earnings estimates upward for the upcoming period, as reported by InvestingPro. TD Cowen’s analysis includes proprietary survey data that suggests Taco Bell is outperforming its quick-service restaurant peers in terms of value perception. This is seen as a testament to the effectiveness of the brand’s value-driven strategies, further supported by the company’s strong dividend history, having maintained payments for 22 consecutive years.
The analyst notes that while Taco Bell’s value efforts are part of the brand’s strategy to drive traffic, they are not the sole focus. As the rest of the quick-service sector enters the second year of aggressive value marketing, Taco Bell’s performance indicates that its strategy is a contributing factor to its growth, rather than the primary driver.
Yum! Brands’ disclosure of their robust first-quarter SSS growth and the unveiling of their long-term plans for Taco Bell reflect the company’s strategic positioning in a challenging industry landscape. The new price target of $164 by TD Cowen reflects an acknowledgment of these factors and the company’s potential for sustained growth.
In other recent news, Yum! Brands reported its fourth-quarter earnings for 2024, with earnings per share (EPS) of $1.61 and revenue of $2.36 billion, meeting analysts’ expectations. The company’s digital sales reached over $30 billion, and it returned $1.2 billion to shareholders through dividends and buybacks. Yum! Brands also opened more than 4,500 new units in 2024, with KFC leading the way by opening 2,900 new units across 97 countries. Analyst firms have adjusted their stock price targets for Yum! Brands, with BofA Securities raising it to $153 and BMO Capital Markets increasing it to $139, both maintaining their respective ratings. BofA noted a robust recovery in the Middle East and strong performance in Latin America, Africa, and Canada, though challenges remain in international unit development. Meanwhile, Yum! Brands projects an 8% growth in same-store sales for Taco Bell in the first quarter, with plans to expand its global presence significantly by 2030. These recent developments highlight Yum! Brands’ strategic focus on digital innovation, international expansion, and shareholder returns.
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