Stifel Explains Why Wendy's (WEN) is Having Difficulty Finding Long-Term Investors
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Stifel analyst Chris O'Cull reiterated a Buy rating and $26.50 price target on Wendy's (NASDAQ: WEN) after 4Q system sales, EPS, and EBITDA results fell short of the Street mean estimates. The company's 2021 outlook was in line with Street estimates, with system sales growth projected to increase MSD in 2022.
The analyst stated "Shares are under pressure because of the 4Q miss, but we also believe the company struggles to attract longterm investors. The breakfast initiative (targeting ~30% sales growth in 2021) and expanding international units (10%+ in 2021) are working; however, these initiatives either lack or are too early to create the virtuous cycle of growth that investors are finding in companies increasing scale through meaningful unit expansion. We believe shares can trade to the mid-$20 range with the current growth drivers, but we continue to believe the company needs to look outside its organic growth plans to deliver meaningful, compounding sales/EBITDA growth."
Shares of Wendy's closed at $20.12 yesterday.
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