Yum! Brands (YUM) is Nomura's New Top Large-Cap Restaurant Pick

Given its downgrade of McDonald’s to Neutral to Buy today, Nomura Securities analyst Mark Kalinowski has a new ur top large-cap restaurant pick - Yum! Brands (NYSE: YUM).

Today the firm reiterated a Buy rating and bumped its price target on YUM to $95.00 (from $92.00).

Kalinowski commented, "We believe YUM! Brands remains ripe for major change. Of the many possibilities for such change, we note that Taco Bell should be divested, as it earns essentially all of its income from the U.S. and doesn’t appear to have any notable synergies with either Pizza Hut or KFC, and we believe YUM! Brands remains one of the most bloated restaurant companies – which is a big opportunity for the creation of shareholder value, if and when the entities that make up YUM! Brands today are molded into one or more lean-and-mean future entities. Given these opportunities, and Pizza Hut U.S. likely doing better than the Street expects, we raise our Q2 same-store sales forecast for Pizza Hut U.S. by 200bp to +4%. We take up our target price by $3 to $95 (22.5x our 2017 earnings estimate vs. ~22x previously.) "

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 $84.29 yesterday.

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