Nomura Securities Upgrades Wendy's (WEN) to Buy

Nomura Securities upgraded Wendy's (NASDAQ: WEN) from Neutral to Buy with a price target of $12.50 (from $11.00) to reflect eflects favorable same-store sales momentum.

Analyst Mark Kalinowski commented: "Our upgrade reflects favorable same-store sales momentum. We increase our Q4 2015 same-store sales forecast for company-owned stores by 40 bps to 3.6% (making ours the new “high on the sell-side” forecast and 70 bps above consensus, according to Consensus Metrix data). We also increase our Q4 2015 same-store sales projection for franchised restaurants by 140 bps to 4.4% (also a new “high on the sell-side” forecast, and 140 bps above consensus). If this 4.4% figure is achieved, it will mark the best quarterly showing for Wendy’s franchised same-store sales in over a decade. Our channel checks indicate that November was the best month for U.S. quick-service burger sector same-store sales over the first 11 months of 2015, and that the first half of December was just as robust. In addition, our channel checks indicate that Wendy’s was a full participant in this sector strength, thanks in part to the “4 for $4” bundled promotion that was rolled out nationally in mid-October. We raise our Q4 2015 and full-year 2015 EPS estimates by $0.01 each, to $0.11 and $0.34, respectively. Our full-year 2015, 2016, and 2017 EPS estimates are now $0.01 above consensus. We increase our target price by $1.50, to $12.50, reflecting an increased target firm value-toEBITDA multiple of 14x (previously 13.5x).With greater confidence in the samestore sales trends and outlook, we now believe a higher target multiple is warranted. We also expect Wendy’s to announce generally favorable news (including what we expect to be a strong Q4 2015 earnings release) during its upcoming Analyst Meeting on February 9."

For an analyst ratings summary and ratings history on Wendy's click here. For more ratings news on Wendy's click here.

Shares of Wendy's closed at $10.77 yesterday.

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