Yum! Brands (YUM) is expected to maintain an accelerating growth trajectory following the separation of Pizza Hut, with Taco Bell poised to recover from temporary pressures and KFC well positioned for long-term gains, UBS Securities said Friday in a note.
The company is scheduled to report its Q3 results Nov. 3.
UBS expects Taco Bell to face residual pressure from food safety headlines, while solid KFC trends likely continued worldwide, supported by progress on strategic initiatives despite ongoing macro pressures.
The investment firm said it is encouraged by the company's "Raise the Bar" strategy and believes it will support growth over the coming years. Food safety headlines create an attractive buying opportunity for a brand likely to return to historically consistent outperformance.
Following Pizza Hut's separation, a more concentrated brand portfolio should boost growth prospects, with the divestiture removing a roughly 100-basis-point drag on operating income growth in recent years, the brokerage said.
UBS expects 6.5% net unit growth for Q3 and 6.2% unit growth in 2026.
UBS kept a buy rating on Yum! Brands, with a price target of $180.
The company's shares were down 3.4% in Friday afternoon trading.
Price: 149.20, Change: -5.25, Percent Change: -3.40
