Why 1 Analyst Thinks Restaurant Brands Is Worth $49 Per Share

In a report published Monday, Citi analysts maintained a Buy rating on

, while raising the price target from $46 to $49. The company had reported 4Q adj EBTIDA of $224.2mm, with the performance of Burger King overshooting expectations. Globally, 4Q SSS (same-store sales) jumped +3% at Burger King, from +2.4% in 3Q. At Tim Horton's SSS climbed +4.1%, from 3Q results of +3.5% in Canada and +6.8% in the US. In the report, UBS noted, "Overall, we believe current valuation for QSR doesn't fully reflect the international growth potential of the THI brand or possible cost savings of the combined company. We believe that Restaurant Brands International deserves to trade at a slight premium (5%) to other asset-light peers given the likelihood of a rapid ramp in international expansion and the potential for a significant cost savings at Tim Hortons, offset by a lack of clarity surrounding management's targets or expansion plans." "Applying a 5% premium (no change) to the current average EV/EBITDA multiple of approximately 19x (previously 17.3x) for QSR's asset-light peers yields a target multiple of 19.9x (previously 18.2x). Applying our 19.9x (previously 18.2x) target multiple to our CY16 EBITDA estimate of $1.74bn (previously $1.84B) and subtracting out net debt and preferred stock results in a $49 (previously $46) price target," the analysts explain.