Oppenheimer Lowers Yum! Brands (YUM) Profit and Growth Forecast

Last week Yum! Brands (NYSE: YUM) lowered guidance to reflect slower growth assumptions in China. The cut reduced Q4 comps projections to -6 percent from -4 percent previously. EPS was taken to $3.24. China represents 43 percent of Yum profits so the impact of potentially slower sales was not overlooked by analysts. Accordingly, Oppenheimer analysts sharpened their pencils.

Analyst Brian Bittner now sees EPS growth of 7 percent in 2013. This is below both Street estimated and management's forecast of 10 percent growth. Profits are also expected to be below forecast, thinks Bittner. He predicts 5 percent profit growth compared to management's 15 forecast.

"While the China issues appear transitory, visibility into timing the rebound is low and the probability of a downward reset in '13 EPS expectations appears high," concluded the analyst.

Oppenheimer maintained an Outperform rating on Yum! Brands (NYSE: YUM) but cut its price target to $74.00 (from $82.00).

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 $66.87 yesterday.

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