TD Cowen maintains Yum! Brands hold rating, $164 target

On Friday, TD Cowen reiterated its Hold rating on Yum! Brands stock (NYSE:YUM), maintaining a price target of $164.00. The stock, currently trading near its 52-week high of $163.30, has demonstrated strong momentum with a 19.35% return over the past six months. According to InvestingPro data, the company maintains a "GREAT" financial health score, though current market prices suggest the stock may be slightly overvalued. The firm’s analyst, Andrew Charles, provided insights into the company’s latest venture, a KFC spin-off concept named Saucy. This new concept combines KFC’s traditional 11 herbs and spices with a limited menu, aiming to rival competitors like Raising Cane’s. Charles highlighted that Saucy could offer a compelling opportunity for KFC’s U.S. locations to transform their business model.

In his analysis, Charles also mentioned that Yum! Brands, which also owns Taco Bell, appears to be a robust investment option within the restaurant sector to navigate the current market uncertainties, including those caused by tariffs. He noted the company’s predominantly franchised, asset-light business model and Taco Bell’s significant contribution to Yum! Brands’ earnings before interest and taxes (EBIT), particularly within the U.S. market. With a market capitalization of $43.22 billion and revenue growth of 6.68% in the last twelve months, the company has demonstrated solid operational performance. For deeper insights into Yum! Brands’ financial metrics and growth potential, InvestingPro offers comprehensive analysis through its Pro Research Report, one of 1,400+ detailed company analyses available to subscribers. This, according to Charles, helps the company stand out amidst a generally challenging environment for the U.S. restaurant industry.

Additionally, the analyst pointed out that Yum! Brands has one of the highest exposures to international markets, excluding Canada, which may be a strategic advantage considering investor concerns about the impact of tariffs on U.S. restaurant spending.

Despite these positive attributes, the Hold rating was maintained by TD Cowen, with the rationale that the current share price already reflects the premium valuation of Yum! Brands compared to its historical performance. Charles believes that while the company has appealing qualities, these are already factored into the stock’s valuation. Supporting this view, InvestingPro data shows the stock trading at a P/E ratio of 30.59, while maintaining a 22-year streak of consistent dividend payments with 17.36% dividend growth in the last twelve months. Investors can access 11 additional ProTips and extensive financial metrics through InvestingPro’s comprehensive analysis platform.

In other recent news, Yum! Brands has been in the spotlight with several key developments. The company announced that CEO David Gibbs plans to retire in the first quarter of 2026, prompting the Board of Directors to initiate a succession planning process. Under Gibbs’ leadership, the company achieved significant digital sales growth, exceeding $30 billion in 2024, and expanded its global presence to over 61,000 restaurant units. Additionally, Piper Sandler raised the stock price target for Yum! Brands to $150, citing strong global net unit growth trends and a recovery in international same-store sales, with a Neutral stance maintained. Meanwhile, Stifel analysts have upheld a Hold rating with a $148 price target, noting Yum! Brands’ strategic focus on accelerating growth through new product introductions at Taco Bell and international expansion plans. The company’s efforts to enhance its market position have been met with cautious optimism from analysts, who are awaiting further evidence of successful execution. These recent developments underscore Yum! Brands’ ongoing strategic initiatives and leadership transition as it continues to navigate the competitive fast-food industry.

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