As of February 23, 2018, Wendy’s (WEN) was trading at $16.88. That day, analysts were expecting the stock to reach $18.13 in the next 12 months, which represents a return potential of 7.4%.
Wendy’s announcement that it will expand its delivery service to more restaurants, image activate its old restaurants, and implement technological advancements such as mobile ordering seems to have compelled analysts to raise their target prices. After Wendy’s released its 4Q17 earnings, BMO increased its target price from $17 to $20, and Wells Fargo raised its target price from $16 to $18. However, SunTrust Robinson lowered its target price from $22 to $21, and Barclays lowered its target price from $20 to $19.
Below are the target prices and return potentials for Wendy’s peers:
Of the 22 analysts following Wendy’s stock, 54.5% are favoring a “buy,” 40.9% are favoring a “hold,” and 4.5% are favoring a “sell.” WEN stock typically moves in tandem with analysts’ ratings. When analysts raise their target prices, the stock tends to rise, and vice versa. Currently, Wendy’s is trading below analysts’ 12-month target price. However, that doesn’t mean an automatic “buy.” Investors are advised to analyze analysts’ estimates as we discussed in the previous parts of this series before making any investment decisions.