YUM! Brands (YUM) Stock Forecast & Price Target

Yum Brands is poised for growth, with Taco Bell targeting an expansion from 7,600 to 10,000 U.S. locations and an international goal of over 3,000 locations by 2030, which would significantly enhance systemwide sales from the current $1 billion. The company projects an increase in margins from 24.2% in 2024 to 25%-26% in 2030, driven by digital order growth and enhanced franchisee profitability, as evidenced by the rise in locations with EBITDA margins over 10%. Furthermore, an accelerated pace of menu innovation and a shift towards higher-margin items, including the successful rollout of Live Mas Cafés, are expected to further boost sales and margins.

Yum Brands faces significant challenges that contribute to a negative outlook on its stock, primarily due to the planned closure of 538 locations resulting from the termination of its Turkey master franchise agreement and an additional 200 closures within the Pizza Hut segment, indicating potential further risks. The firm reported a decline in system sales and accelerating deceleration across key brands, with Pizza Hut showing a notably weaker performance—evidenced by a 2% decline and increased competitive pressure from new entrants in the quick-service restaurant (QSR) market, which could further erode margins and pricing power. Additionally, while Yum anticipates long-term net restaurant growth of 5%, concerns around international development headwinds and a difficult sales environment in 2024 suggest that achieving this growth may be increasingly challenging.