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On Monday, UBS analysts maintained a Neutral rating on Wendy’s (NASDAQ:WEN) shares, with a steady price target of $14.00. The decision follows Wendy’s first-quarter results and commentary, which revealed weaker-than-expected same-store sales (sss) and a reduction in the 2025 guidance due to macroeconomic and industry challenges. Currently trading at $12.91, near its 52-week low of $12.05, the stock has declined over 34% in the past six months. The company aims to fortify its business and increase market share through 2025. According to InvestingPro data, 16 analysts have recently revised their earnings expectations downward, with price targets ranging from $13 to $21.
Wendy’s reported a mid-single-digit percentage decline in quick-service restaurant (QSR) burger category traffic in the first quarter, with the most significant decrease occurring among consumers with incomes below $75,000, experiencing a high-single-digit percentage drop. Despite these challenges, the company maintains a solid 4.46% dividend yield and has sustained dividend payments for 23 consecutive years. Consequently, expectations are that the industry’s prior same-store sales forecast of a 1% decline to flat will likely be revised downward.
The adjusted 2025 global system sales growth guidance has been lowered to between a 2% decline and flat, primarily reflecting downward revisions to U.S. same-store sales growth targets. However, international same-store sales targets and the outlook for global unit development, at 2-3%, remain unchanged.
Wendy’s targeted adjusted EBITDA for 2025 is set at $530-545 million, taking into account recent sales trends and strategic initiatives planned to stimulate growth in the upcoming quarters. The company’s focus is now on executing strategies to strengthen U.S. same-store sales trends and meet unit development targets.
Despite the current valuation appearing reasonable at approximately 9 times the projected 2026 EBITDA, with a P/E ratio of 13.6x and EV/EBITDA of 12.1x, UBS analysts are looking for signs of a stronger sales trajectory, accelerated multi-year unit expansion, and improved free cash flow (FCF) growth as potential drivers for the stock’s upside. For deeper insights into Wendy’s valuation and growth prospects, including exclusive Fair Value analysis and comprehensive financial health scores, visit InvestingPro, where you’ll find detailed research reports and expert analysis.
In other recent news, Wendy’s Co. reported its first-quarter 2025 earnings with an earnings per share (EPS) of $0.20, aligning with analyst expectations. However, the company’s revenue fell short, coming in at $523.5 million compared to the anticipated $529.73 million. Wendy’s U.S. same-store sales declined by 2.8%, while international sales saw a 2.3% increase. Following the earnings report, Loop Capital Markets adjusted its financial outlook for Wendy’s, reducing the price target from $26 to $21 but maintained a Buy rating. Meanwhile, Evercore ISI also revised its outlook, lowering the price target from $16 to $15 and maintaining an In Line rating, citing a slower growth forecast in same-store sales for upcoming quarters. Despite these adjustments, Evercore ISI noted optimism for the second half of 2025 due to planned renovations and innovations, including product overhauls and increased advertising. Wendy’s executives reaffirmed their commitment to strategic growth initiatives, focusing on customer experience and international expansion.
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