YUM breakout target $98

1 lut 2019

Analysts’ recommendations
Of the 24 analysts that follow Yum! Brands (YUM), 41.7% have given the stock “buy” ratings, while 54.2% have given it “holds,” and 4.2% have given it “sells.” On average, analysts have set a price target of $95.05 on the stock, representing a potential return of 2.6% from its January 29 closing price of $92.67.

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Since the beginning of December 2018, Barclays, JPMorgan Chase, and Morgan Stanley have raised their price targets on YUM. Barclays has raised its price target from $94 to $97, JPMorgan Chase has raised its price target from $90 to $91, and Morgan Stanley has raised its price target from $90 to $97. However, on January 11, Goldman Sachs downgraded the stock from a “neutral” to a “sell” and also lowered its price target from $83 to $76.

Peer comparison
Of the 23 analysts that follow Domino’s Pizza (DPZ), 60.9% are favoring “buys,” while the remaining 39.1% are favoring “holds.” Analysts have given the stock a price target of $292.81, which represents a potential upside of 6.5% from its price of $274.85.

Of the seven analysts that follow Papa John’s (PZZA), 71.4% are favoring “buys,” and the remaining 28.6% are favoring “holds.” Analysts have set a price target of $57.50 on the stock, which represents a potential upside of 35.8% from its price of $42.33.

Valuation multiple
On January 29, Yum! Brands was trading at a forward PE multiple of 24.3x compared to 22.8x before its announcement of its third-quarter earnings results. The increase in Yum! Brands’ stock price also raised its valuation multiple. On the same day, its peers Domino’s Pizza and Papa John’s were trading at forward PE multiples of 28.7x and 28x, respectively.

Yum! Brands is currently trading at 25.0x analysts’ 2018 EPS expectation of $3.70 and 24.3x analysts’ 2019 EPS expectation of $3.81, with its EPS expected to rise 25.1% in 2018 and 2.8% in 2019.