Jefferies Cuts Price Target on Yum! Brands (YUM) Following China Spin-Off

November 21, 2016 7:52 AM EST
Get Alerts YUM Hot Sheet
Price: $63.06 --0%

Rating Summary:
    16 Buy, 11 Hold, 2 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 14 | Down: 20 | New: 16
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Jefferies maintained a Hold rating on Yum! Brands (NYSE: YUM), and cut the price target to $60.00 (from $85.00), following the company's split from China. The next potential catalyst for YUM will be around further re-franchising as it looks to get from ~93% to ~98% franchised by 2018 with net G&A savings of $300mm and at least $3.75 of EPS by 2019. To achieve its $3.75 EPS target for 2019, YUM will need to exit 2018 with at least ~$3.30 of EPS.

Analyst Andy Barish commented, "Updating our model and price target following the split from China. With the China spin-off now complete, the outlook for YUM will return to fundamentals and its 98% franchised target with $300mm net G&A savings and at least $3.75 of EPS by 2019. We are taking a conservative approach and not modeling any benefits from further re-franchising given the uncertainty around timing. Our PT goes to $60 from $85, based on 14x our '17 EBITDA est. We remain at Hold."

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 $62.36 yesterday.



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