Oppenheimer Reiterates Buy On Yum, Says 'Don't Let This One Pass You Buy'

In a report published Wednesday, Oppenheimer analyst Brian Bittner maintained an Outperform rating on

, with a price target of $105, saying that the stock could be worth $140-150 in "our upside case." The company reported its adjusted EPS at $0.69, beating the Street expectation of $0.62, on the back of better China and TB profits. "China won't lap last year's collapse in business until July 20, so not surprising to see mgmt reconfirm its '15 EPS growth outlook of 10%+, despite negative 1H," analyst Brian Bittner said. Although China SSS were down 10 percent, the figures had accelerated sequentially in 2Q14, exhibiting that the "core trends are climbing." Yum! Brands believes that "substantial" SSS was achievable in the second half. China restaurant margins came in at 14.6 percent, better than the Street's 13.5 percent. Although this was down 220bps y/y, it was better than the 450bps decline in the previous quarter. TB continued to impress, recording 6 percent SSS. KFC was "solidly in-line," with 3 percent SSS, and PH SSS were flat. Segment profits were in-line due to better margins. Bittner said that the company's 2Q results were "a bit non-eventful (as expected)," while adding that "many data points support our bullish thesis." "Fundamentally, core China trends imply double-digit comps in 2H15 and recent margin execution suggests significant upside to Street's lazy EPS estimates through '16. On the side, TB remains an outperforming contributor, KFC represents welcomed stability and PH has turnaround potential," the report explained.