KeyBanc Cuts Restaurant Brands International’s Price Target, But Reiterates an Overweight Rating

KeyBanc analysts lowered their price target for Restaurant Brands International (NYSE:QSR) to $80 from $85 while maintaining their Overweight rating on the stock.

The analysts noted that the stock has declined 10% year-to-date, underperforming its peer group, which fell by 8%, and the S&P 500, which gained 15%. The analysts attribute this underperformance to sluggish industry trends and poor investor sentiment, as competitors have aggressively pushed value.

Proprietary data and industry discussions suggest that Q2 same-store sales (SSS) trends for Burger King in the U.S. may fall several percentage points below Street estimates. Consequently, the analysts reduced their SSS growth and EPS estimates for the company.

However, they believe Burger King is better positioned to compete due to efforts to improve operations and reduce reliance on deep discounts, such as coupons.

As a result, the analysts adjusted the price target to $80 and revised the 2024 and 2025 EPS estimates to $3.34 and $3.85, respectively, reflecting lower growth assumptions for Burger King U.S. SSS. Despite these adjustments, they maintained an Overweight rating on the stock, citing the health of other parts of the company’s business and long-term valuation upside driven by improvements in store-level cash flow, development, and visibility on store remodels.