JP Morgan Upgrades Yum Brands, Cites Activism
In a report published Friday, JP Morgan analysts upgraded the rating on Yum! Brands, Inc. (NYSE: YUM) from Neutral to Overweight. The price target was raised from $83 to $108. The analysts expect the company to spin-off its China business.
"[O]ur sense is Yum is not being defensive against activist investors' recent points, and in fact seems to welcome ideas that can drive short and long term shareholder value," the analysts said.
In addition, the analysts believe that a spin-off of the China business and the subsequent "levering of the capital-light franchise business" is now a probability. The new CEO, Greg Creed, is likely to become a change agent for the company, aligning it to the modern market.
According to the JP Morgan report, "Yum China is maturing and funding all of its own growth, and in our opinion doesn't need Yum's balance sheet in any way. In fact the segment is run very independently from the global brands ex-China."
The spin-off seems "rational" in the current market conditions and is expected to help create immediate as well as longer term value for shareholders.
Latest Ratings for YUM
May 2015 | JP Morgan | Upgrades | Neutral | Overweight |
Apr 2015 | Citigroup | Maintains | Neutral | |
Apr 2015 | Jefferies | Maintains | Hold |
View More Analyst Ratings for YUM
View the Latest Analyst Ratings
See more from Benzinga
© 2015 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
