Yum! Brands Tipped For 16% Upside As Analyst Points To Strong Unit Growth, AI Investment

Goldman Sachs analyst Christine Cho upgraded Yum! Brands, Inc. YUM from Neutral to Buy with a price forecast of $167.

The analyst asserted that the company demonstrates a best-in-class unit growth trajectory, which stands out compared to most peers who are either below or at the low end of their stated growth algorithms.

Furthermore, the analyst highlighted YUM’s high franchise mix, at 98% of units, which she expressed builds relative resilience in the business.

Also Read: Taco Bell Parent Yum Brands Under Pressure, Expects Chicken Nuggets To Drive Q2 Traffic

The analyst also pointed to improved digital integration across YUM’s various brands and at the enterprise level, specifically mentioning Byte! by YUM. The analyst said these digital advancements are expected to improve operational efficiency and drive top-line acceleration.

Finally, the analyst emphasized Taco Bell U.S.’s sustained value leadership and the significant opportunity to accelerate international growth for the brand.

Based on these considerations, the analyst indicated a 16% upside potential to the 12-month price forecast of $167, which she noted compares favorably to the 9% average upside for the rest of their coverage.

The analyst revised the EBITDA estimates to $2.90 billion (from $2.91 billion) for FY25, $3.16 billion (from $3.16 billion) for FY26 and $3.43 billion (from $3.44 billion earlier).

In April, Yum! Brands reported first-quarter revenue of $1.79 billion, missing the analyst consensus estimate of $1.8 billion. Adjusted EPS of $1.30 beat the analyst consensus of $1.29.

The analyst highlighted several trends in the sector, including diverging brand performance, with casual dining showing more resilience year-to-date than fast food.

Cho added that investors are increasingly favoring self-help narratives driven by unique traffic/market share catalysts or margin opportunities based on operational efficiency.

While commodity/labor costs are relatively stable, tariffs remain a key swing factor for the second half, and companies are reluctant to raise prices given soft consumer sentiment, she said.

The analyst sees elevated risk to global restaurant development plans in FY26/27, potentially pushing unit growth below the stated long-term algorithms.

Price Action: YUM shares are trading higher by 0.64% to $144.89 at last check Wednesday.

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