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Why The New Yum! Is Looking More And More Attractive...

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Investors who have been long Yum! Brands, Inc. (NYSE: YUM) shares got a welcome message from UBS analyst Keith Siegner Monday morning: "Signs China improvement under way; worth doing work on new Yum! now." (Emphasis Benzinga Newsdesk)

The UBS analyst's research note hearkened back to the conference call which was attached to Yum's fourth-quarter results. On the call, Yum management "sounded optimistic about many areas of the business," according to Siegner. "Improved momentum across much of the China business, and a more aggressive plan that appears to be generating early success, is encouraging, even as Pizza Hut challenges linger," Siegner highlighted.

And looking at KFC China, Siegner pointed to "positive momentum that has sustained into the new year."

"It seems investor apathy is currently very high in this name, but we believe this will change rapidly and soon," Siegner said.

The UBS analyst continued, "By late 2016, we believe new Yum! will be attractively positioned for what should be at least a 13.5-14.0x EBITDA multiple, consistent with other franchisors providing mid-teens total returns, though Yum! will be even more diversified."

The New Yum!

Siegner believes the "new Yum! looks more and more attractive for investors." He called progress on both sales and margins for each of the company's global brands "impressive" given "a highly competitive and challenging global macro environment."

The analyst maintains a Buy rating and $95 price target on shares of Yum!

As shares of Yum! closed Monday's session down more than 3 percent to $67.43, Siegner's price target implies potential upside of about 41 percent.

Latest Ratings for YUM

Nov 2017UBSMaintainsBuy
Nov 2017BMO CapitalMaintainsMarket Perform
Nov 2017Morgan StanleyMaintainsEqual-Weight

View More Analyst Ratings for YUM
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