Deutsche Bank Upgrades Yum! Brands (YUM) to Buy; Top Pick for 2014

November 22, 2013 6:58 AM EST Send to a Friend
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Price: $70.06 +0.65%

Rating Summary:
    13 Buy, 11 Hold, 0 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 27 | Down: 26 | New: 17
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Deutsche Bank upgraded Yum! Brands (NYSE: YUM) from Hold to Buy with a price target of $90.00 (from $72.00).

Analyst Jason West sees a favorable risk-reward - with about 35% upside and about 7% downside - as earnings growth reaccelerates over the coming quarters.

In addition, with many restaurant companies trading at cyclically high multiples against peak earnings, YUM is one of the few names combining above-avg. EPS growth and room for multiple expansion into 2014, he said.

"YUM's story is also supported by steady franchise royalty income from the US/YRI segments, which are ~90% franchised and generate ~2/3 of YUM's profits," West notes. "Additionally, the YUM portfolio offers significant free cash flow (even in down yrs.)."

The firm raised 2014 EPS estimates from $3.49 to $3.59 and set 2015 EPS of $4.19.

For an analyst ratings summary and ratings history on Yum! Brands click here. For more ratings news on Yum! Brands click here.

Shares of Yum! Brands closed at $74.92 yesterday.


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