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Wall Street’s ‘Buy’ Rating for Wendy’s ahead of Q1 Earnings

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Analysts’ recommendations

Of the total 23 analysts following Wendy’s (WEN), 56.5% have a “buy” rating while 43.5% have a “hold” rating. No analysts have a “sell” rating. On average, analysts have given Wendy’s a 12-month price target of $19.16, which represents a return potential of 2.4% from its stock price of $18.71.

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On April 10, Cowen and Company initiated coverage on Wendy’s with an “outperform” rating and a price target of $21.0. However, on March 20, Mizuho downgraded the stock from “buy “to “neutral” and lowered its price target from $20 to $18. Also, since Wendy’s reported its fourth-quarter earnings, J.P. Morgan, UBS, and Stifel have all cut their price targets.

Peer comparisons

Of the total 14 analysts who cover Jack in the Box (JACK), 42.9% said “buy” and the remaining 57.1% said “hold.” On average, analysts have given JACK a 12-month price target of $91.0, which represents a return potential of 17.0% from its stock price of $77.80.

Of the 30 analysts covering McDonald’s (MCD), 80.0% say “buy” and 20% recommend a “hold.” Analysts have given MCD a price target of $202.04, which represents a return potential of 2.5% from its stock price of $197.12.

Of the 16 analysts covering Restaurant Brands International (QSR), 75% have a “buy “rating while 25% have a “hold” rating. Analysts have given QSR a 12-month price target of 73.18, which represents 11.7% from its stock price of $65.50.

Valuation multiple

The increase in Wendy’s stock price since its fourth-quarter earnings has also raised its valuation multiple. As of April 29, the company was trading at a forward PE multiple of 28.3x, compared to 26.6x before the fourth-quarter earnings. On the same day, Jack in the Box, McDonald’s, and Restaurant Brands International were trading at forward PE multiples of 16.2x, 23.7x, and 23.1x, respectively.

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