Evercore ISI Remains a Buy on Yum! Brands (YUM)

By Jason Carr

Evercore ISI analyst David Palmer maintained a Buy rating on Yum! Brands (YUMResearch Report) yesterday and set a price target of $130. The company’s shares closed last Monday at $116.54, close to its 52-week high of $119.72.

Palmer wrote:

“We believe David’s financial and institutional knowledge made him a strong right-hand to Mr. Creed during a period of rapid change. During his time as CFO, Mr. Gibbs has had a strong role in the transformation of 77% franchised business in 2015 (pre- Yum! China spin) to a 98% franchised mix today. In addition, the company has been adept at reducing overhead (from 3.4% of system sales in 2015 to ~1.7% in 2019) while signing deals to bolster growth or capabilities. Lastly, we believe David has had a hand in making acquisitions or alliances with technology companies (GrubHub, QuikOrder), consumer insights consultants (Collider Labs), and brands (Telepizza) to bolster franchisee support or accelerate growth. In addition, Yum! Brands is on track to deliver on its targets of >$3.75 in EPS (from ~$2.20 in 2015) and 100% FCF conversion (from ~85% in 2015).”

According to TipRanks.com, Palmer is a 5-star analyst with an average return of 10.3% and a 70.2% success rate. Palmer covers the Consumer Goods sector, focusing on stocks such as Mondelez International, Conagra Brands Inc, and Hostess Brands Inc.

Currently, the analyst consensus on Yum! Brands is a Moderate Buy with an average price target of $117.81, representing a -0.7% downside. In a report issued on August 2, Robert W. Baird also maintained a Buy rating on the stock with a $127 price target.

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Yum! Brands’ market cap is currently $35.69B and has a P/E ratio of 27.86. The company has a Price to Book ratio of -4.44.

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Yum! Brands, Inc. is a quick service restaurant company, which engages in the development, operation, franchise, and licenses a system of restaurants. It operates through the following segments: KFC Division, Pizza Hut Division, and Taco Bell Division. The KFC Division segment comprises of all operations of the KFC concept.