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Investing.com - UBS lowered its price target on Wendy’s (NASDAQ:WEN) to $11.00 from $14.00 on Tuesday, while maintaining a Neutral rating on the fast-food chain’s stock ahead of its second-quarter earnings report. According to InvestingPro data, the stock is currently trading near its 52-week low of $10.08, having declined over 35% year-to-date.
The price target reduction reflects current sales pressures, a challenging macro environment limiting visibility into the 2025 growth outlook, and valuation compression in the quick-service restaurant sector, according to UBS. Despite these challenges, InvestingPro data shows Wendy’s maintains strong fundamentals with a 5.5% dividend yield and a 23-year track record of consistent dividend payments.
UBS expects Wendy’s traffic and same-store sales remained under pressure in the second quarter, with market expectations for U.S. same-store sales to decline approximately 3-3.5%, compared to consensus estimates of -2.8%.
The investment firm noted that aspects of Wendy’s fiscal year 2025 guidance could potentially be trimmed, including the system sales target currently set between -2.0% and flat.
UBS also highlighted that the ongoing CEO search adds "another layer of uncertainty" for Wendy’s, though it acknowledged the stock’s valuation remains "undemanding and attractive to history" with an approximately 11% 2026 estimated free cash flow yield compared to a 5-year average of about 7%.
In other recent news, Wendy’s Company has appointed Pete Suerken as the President of its U.S. operations, effective immediately. This leadership change follows the announcement of CEO Kirk Tanner’s upcoming departure, with the board actively searching for his replacement. In terms of financial performance, Truist Securities has lowered its price target for Wendy’s to $14, citing expectations of a significant miss in second-quarter U.S. same-store sales. Similarly, Loop Capital adjusted its price target to $16, based on declining sales trends observed in recent weeks.
Wendy’s has also announced plans to expand its global footprint by opening 190 new restaurants across Italy and Armenia. The company has partnered with Your Food S.R.L to develop 170 locations in Italy by 2035, with the first openings in Milan anticipated by mid-2026. Additionally, a deal with Wen Restaurant LLC will bring 20 new restaurants to Armenia by 2030, starting with a location in Yerevan’s city center. Despite these expansion efforts, Bernstein SocGen Group has maintained its Market Perform rating and a $15 price target on the stock. These developments reflect a mix of strategic changes and financial challenges for Wendy’s.
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