Wendy's (WEN) PT Lowered to $12 at Evercore ISI

Evercore ISI analyst David Palmer lowered the price target on Wendy's (NASDAQ: WEN) to $12.00 (from $14.00) while maintaining a In Line rating.

The analyst comments "Our view: Wendy’s systemwide cash flow and balance sheet has deteriorated over time. This is true for both franchisees and the company (5.9x debt-to-EBITDA ‘25e, including finance leases). Wendy’s needs a marketing-oriented CEO to help with quick wins. Today, Wendy’s has high food costs (we estimate over 28% vs. under 22% for McDonald’s, excluding paper) but seems to lack the appropriate consumer credit in either quality (in the premium core menu) or value. In our view, everything should be on the table to bolster profitability, including lower discounting and reduced breakfast hours to bolster franchisee cash flow ahead of the hiring of a new CEO. We are lowering our 2H25 US SSS from -1% to -7% (cons -2%) and 2025 and 2026 EPS by on average 10%. While the stock looks inexpensive trading at a P/E of 11x 2025 EPS, we will wait to hear more about the company’s strategy. With our lower estimates, our price target goes from $14 to $12, equating to 13.5x our 2026e EPS."

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