Yum China stock price target lowered to $56.50 from $60.50 at BofA

Published 07/07/2025, 22:38
Yum China stock price target lowered to $56.50 from $60.50 at BofA

Investing.com - BofA Securities lowered its price target on Yum China Holdings (NYSE:YUMC) to $56.50 from $60.50 on Monday while maintaining a Buy rating on the stock. According to InvestingPro data, the company maintains a GREAT financial health score and trades at an attractive PEG ratio of 0.94, suggesting reasonable valuation relative to its growth prospects.

The firm noted that Yum China has underperformed the MSCI China index by 16% since Liberation Day, attributing the lag to market reassessment of the company’s long-term growth prospects following its shift to smaller stores and franchising. Despite this underperformance, the company has delivered a 50% total return over the past year and maintains a solid 2.1% dividend yield.

BofA’s channel checks suggest same-store sales growth (SSSG) of 0-1% in the second quarter, with indications that June performance could exceed expectations. The firm also observed more than 10% sequential delivery order growth during the past weekend.

The research note highlighted that Meituan and Alibaba (NYSE:BABA) have begun offering aggressive delivery subsidies, which could support same-store sales growth in the third quarter of 2025, traditionally a peak season for the company.

Despite lowering the price target, BofA maintained its Buy rating on Yum China, citing an improving same-store sales growth outlook for the second half of 2025 and strong yields.

In other recent news, Yum China Holdings reported first-quarter earnings that did not meet analyst expectations. The company posted adjusted earnings per share of $0.77, missing the consensus estimate of $0.80, and revenue came in at $2.98 billion, below the projected $3.17 billion. Despite these results, Yum China achieved same-store sales at 100% of prior year levels for the first time since Q1 2024 and marked its ninth consecutive quarter of same-store transaction growth. Total (EPA:TTEF) system sales increased by 2% year-over-year, excluding foreign currency translation, with a 4% net new unit growth. The company opened 247 net new stores, bringing its total to 16,642. Yum China’s operating profit rose 7% year-over-year to $399 million, with restaurant margins expanding by 100 basis points to 18.6%. In a separate development, UBS raised its price target for Yum China to $59 from $57.26, maintaining a Buy rating. UBS’s analysis suggests significant franchise growth, projecting the potential to reach 30,000 locations by 2030 and highlighting a 12% compound annual growth rate in cash flow from 2026 to 2030. The company plans to return $3 billion to shareholders through 2026, in addition to $1.5 billion delivered in 2024.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2025 - Fusion Media Limited. All Rights Reserved.