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Sometimes less is more, and that may be the case for Yum Brands , according to Evercore ISI. The firm upgraded the fast-food conglomerate to outperform from in line. It also hiked its price target to $180 from $165, signaling 20% upside from Tuesday’s close. The rating change comes a day after Yum Brands said it was exploring strategic options for its struggling Pizza Hut business, including a sale. Offloading that franchise could give the stock a long-term boost, analyst David Palmer wrote. “With an anticipated sale of Pizza Hut, our 2027e EPS drops from $7.64 to ~$7.10. That said, after the spin-off, we are modeling higher—and more consistent—profit growth,” Palmer said in a note to clients. “Given low capital intensity and potential proceeds from a Pizza Hut sale—our base case is a low $3B valuation—Yum Brands can meaningfully accelerate share repurchases.” The analyst is also bullish on Taco Bell, as the Mexican fast food chain gains market share. “Yum highlighted that Taco Bell is winning with a cautious, but resilient consumer and that it grew sales across all income bands with outsized growth among families and younger consumers,” he said. “We estimate that despite double-digit beef inflation, company-owned margin can still hit 24% for the year.” Yum Brands rose more than 1% in the premarket after Evercore’s upgrade. Most analysts are on the sidelines when it comes to Yum Brands, however. Of the 32 who cover the stock, 21 rate it a hold.
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