J.P. Morgan Overweight on Yum Brands

J.P. Morgan Chase & Co. is out with a research report on Yum Brands YUM and it has an Overweight rating and a $65 price target on shares. In a note to clients, J.P. Morgan Chase & Co. writes, "In addition, China contributes 6-8% of YUM's 10% stated earnings growth. YUM saw comps of 15.5% in 1H11 vs. 4.2% for MCD, and we believe both companies maintain pricing ability as price increases had been running below recent food (approximately 9% in F11) and labor (mid to high-teens) inflation. In fact, in the past couple of days YUM took further pricing, consistent with management's and our prior comments that pricing power still existed in the market. To us, our expectations for 5% comps for YUM in China in F12 occur even with slowing economic growth, but not a significant contraction." Shares of YUM gained 76 cents yesterday to close at $53.36, a gain of 1.44%.