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Investing.com -- RBC Capital Markets began coverage on several U.S. restaurant stocks, taking a bullish view on Wingstop and Cava while initiating McDonald’s and Yum Brands at neutral ratings.
The brokerage started Wingstop and Cava at Outperform, calling them among the most attractive growth stories in the sector.
It sees Wingstop as “one of the most compelling growth stocks in the chicken category,” backed by strong franchise returns and early-stage international expansion.
The stock’s 25% pullback in the past three months makes it appealing, RBC said, setting a price target of $315.
On Cava, RBC cited the Mediterranean chain’s leadership in a fast-growing category and improving unit economics, with room to expand from 398 locations to more than 2400 over time.
The firm said health and wellness trends and menu innovation should help drive mid-single-digit same-store sales growth and margin gains. It set an $80 price target.
RBC initiated McDonald’s and Yum Brands at Sector perform, saying risk and reward appear balanced.
While McDonald’s continues to innovate and expand loyalty programs, the firm said consumer softness could limit U.S. same-store sales growth, and most new units are expected to come from lower-revenue markets. Its price target is $320.
For Yum Brands, which owns Taco Bell, KFC and Pizza Hut, RBC said the rollout of its new Byte digital platform could help over time, but near-term benefits are limited.
It noted that Taco Bell’s outperformance is well recognized and KFC faces rising international competition, setting a $165 target.