Goldman Sachs Analyst Christine Cho upgrades good! Brands, Inc. (NYSE:YUM) From neutral to predict purchase at a price of $167.

Analysts assert that the company demonstrates a top-notch unit growth trajectory that stands out from most peers who are below or at the low or low end of their prescribed growth algorithms.

Additionally, the analyst highlighted Yum’s high franchise portfolio, with 98% of units saying she has built relative resilience in her business.

Also read: Taco Bell Parents' Centennial Brand Under pressure, Chicken nuggets are expected to attract Q2 traffic

The analyst also noted that digital integration has been improved at Yum's various brand and enterprise levels, especially mentioning bytes! yum. Analysts say these digital advancements are expected to improve operational efficiency and drive front-line acceleration.

Finally, analysts highlight Taco Bell US's ongoing value leadership and have great opportunities for the brand to accelerate international growth.

Based on these considerations, analysts said the upside potential for the 12-month price forecast for $167 is 16%, and she noted that the average upside potential for the remaining coverage is more favorable.

Analysts estimate EBITDA at $29 billion (from $2.91 billion), from $2.91 billion (from $3.16 billion) in fiscal 2005 and $3.43 billion (from $3.44 billion) in fiscal 2006.

In April, yum! Brands reported first-quarter revenue of $1.79 billion, with a lack of analyst consensus estimated at $1.8 billion. Adjusted EPS was $1.30, beating the analyst consensus of $1.29.

Analysts highlighted several trends in the industry, including divergence in brand performance, with casual dining being higher than fast food range than fast food range.

Cho added that investors increasingly prefer self-service narratives driven by unique transportation/market share catalysts or margin opportunities based on operational efficiency.

She said that despite the relatively stable commodity/labor costs, tariffs remain a key factor in the second half of the year and that companies are reluctant to raise prices due to soft consumer sentiment.

The analyst believes that in FY26/FY27, the risk of global restaurant development plans is increasing, which may push unit growth below long-term algorithms.

Price action: YUM stock traded 0.64% on the previous check to $144.89.

Read the next article:

Image via shutterstock

See more analyst ratings