Zacks Investment Research upgraded shares of Yum! Brands Inc. (YUM) from UNDERPERFORM to NEUTRAL on May 02, 2013, with a target price of $71.00.
We are reverting to a Neutral recommendation on Yum! Brands from Underperform based on the company's overall improved outlook. Although Yum! Brands' first-quarter 2013 adjusted earnings per share and revenues fell sharply due to the lackluster performance of the China division, management expects it to record positive same-store sales from the fourth of 2013. The negative publicity regarding the quality of chicken supplied to Yum!'s KFC in China in late Dec 2012 and the outbreak of avian flu in mid-April dented the company's top line and will likely mar its second-quarter results as well. But investors should note that the threats faced by the company are mostly external. Yum! has a proven business model, which has survived similar threats in the past. Further, Yum! remains relatively well-positioned in the US and YRI segments. Management expects double-digit growth in earnings from 2014 onward.
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