Zacks Investment Research downgraded shares of Burger King Worldwide, Inc. (BKW) from OUTPERFORM to NEUTRAL on September 19, 2014, with a target price of $33.00.
We downgrade our recommendation on Burger King to Neutral from Outperfrom given the criticism faced by the company for its proposed merger deal with Tim Hortons. It is being considered a tax inversion deal and hence not appreciated by the federal government. Also, the company posted mixed second quarter results in August wherein revenues of $261.2 million missed the Zacks Consensus Estimate by 0.7% and declined 6.1% year over year owing to the refranchising of company-owned restaurants. Like its peers, the company also faces the pressure of rising food costs. However, the company posted earnings of $0.25 that beat the Zacks Consensus Estimate by 8.7% and also increased year over year driven by lower operating costs and higher margins. Moreover, we are encouraged by the company's efforts toward product introductions, restaurant upgrades, operational improvements and international expansion.
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