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Cowen Turns Bullish On Tim Hortons' Parent Company

Cowen Turns Bullish On Tim Hortons' Parent Company

The bullish case for Restaurant Brands International Inc (NYSE: QSR), the parent company of multiple global restaurant brands including Tim Hortons, Burger King and Popeyes, can now be made, according to Cowen.

The Analyst

Cowen's Andrew Charles upgraded Restaurant Brands International from Market Perform to Outperform with a price target lifted from $64 to $74.

The Thesis

Tim Hortons' sales trends bottomed and three self-help initiatives should improve investor sentiment, Charles said in a note. These include:

  • Testing of an all-day breakfast menu, which can add 100 basis points to comps if successful;
  • The appointment of a "credible" chief marketing officer Axel Schwan who was highly successful at his prior post in Burger King and the appointment of Duncan Fulton as chief corporate officer who can "build goodwill" with dissident Tim Hortons' franchise owners,; and
  • New mobile ordering capabilities.

Meanwhile, Tim Hortons' recent struggles have overshadowed the strong performance at other units, including the net restaurant growth seen at Popeyes and BK International, the analyst said. In fact, through 2020, the RBI entity as a whole is expected to trail only Domino's Pizza, Inc. (NYSE: DPZ) in terms of global growth.

Restaruant Brands has the financial capacity to acquire another quick-service restaurant chain although it's likely prioritizing Tim Hortons' sales, according to Charles. An acquisition could be favorably viewed by investors in the event that Tim Hortons' sales don't turnaround as expected as a new company under its umbrella can generate potential EBITDA synergies.

Price Action

Shares of Restaurant Brands Intentional were trading higher by 1 percent Tuesday at $63.83.

Related Links:

Jim Chanos Reveals Short Thesis On A Couple Of Fast-Food Stocks

Stifel's Deep Dive Into The Restaurant Sector

Image credit: Jerry Huddleston, Flickr

Latest Ratings for QSR

Feb 2021Morgan StanleyMaintainsEqual-Weight
Feb 2021KeyBancMaintainsOverweight
Jan 2021Goldman SachsInitiates Coverage OnSell

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