Morgan Stanley has released a report indicating that Yum China Holdings, Inc. (NYSE: YUMC) achieved positive same-store sales growth targets in the third quarter. Its July performance met the company's expectations, with accelerated store expansion unlocking greater growth potential.

The investment bank reiterated its "Overweight" rating on Yum China Holdings, Inc. US-listed shares, maintaining a price target of $60 and designating it as a top pick. Morgan Stanley has adjusted its earnings forecasts for 2026 through 2028 by up to 1% to reflect a faster store opening pace, which does not yet account for the potential impact of the Pizza Hut acquisition.

Morgan Stanley views the current valuation as attractive, forecasting a compound annual growth rate of 10% for operating profit and 15% for earnings per share between 2025 and 2027.