UPDATE: Bank of America Upgrades Yum! Brands on Positive Outlook

In a report published Wednesday, Bank of America analyst Joseph T. Buckley upgraded Yum! Brands YUM from Underperform to Neutral, and raised the price target from $60.00 to $79.00.

In the report, Bank of America noted, “We are raising our rating on YUM shares from Underperform to Neutral and are raising our price objective from $60 to $79. There is no change in our below consensus estimates. We continue to expect KFC China's recovery to be challenging. But the market appears more willing than we expected to look through the China challenges, suggesting the issues are likely reflected in the stock. We expect YUM's China business to improve sequentially. The direction of the business may prove more important than the specific rate of recovery. Our revised price objective reflects a shift to our 2014 estimates rather than a hybrid 2013-14 approach and raising valuation parameters on Yum's franchised U.S. business from 12x to 15x and moving to the mid-point rather than the low end of the 25x-30x P/E range that we have historically applied to Yum's China earnings.”

Yum! Brands closed on Tuesday at $74.00.