Yum! Brands (YUM) is positioned for continued growth as Taco Bell and KFC maintain solid momentum, with guidance likely to hold even amid pressure from adverse weather, fuel costs, geopolitical conflicts and softer consumer spending, UBS Securities said Wednesday in a report.
Taco Bell will likely be the main growth driver in Q1, helped by value offerings, new menu items, marketing and digital demand, the report said. The chain also stands to benefit from a large product pipeline and expanding beverage platform, with the Live Mas Cafe initiative seen as another multiyear sales driver, UBS said.
KFC is also expected to post solid trends, supported by strength in the UK and Asia, and the US business appears to be improving while facing a competitive market, the report said.
Store count growth should remain solid, led by new Taco Bell openings and KFC's development pipeline in India and China, though potential Pizza Hut closures may counter some of the expansion, the report said.
Yum's core brands are expected to support faster earnings growth over time, while investors looking for updates on the Pizza Hut review and the Byte platform, the report said.
UBS kept its buy rating on Yum stock with a $180 price target.
Q1 results are due April 29.
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