Yum! Brands (YUM) Q2 results were better than feared as Taco Bell sales trends began recovering from news tied to Cyclospora infections, RBC Capital Markets said in a report Thursday.

The report said trends have showed steady improvement, with transactions even inflected positive during this Tuesday's promotion, and social sentiment has returned to pre-issue levels.

"This gives us confidence that the brand can return to its industry-leading comp growth in 4Q and won't have a long-term impact on its reputation in the mind of the consumer," it said.

The note also said its KFC brand still has opportunity for

growth amid ongoing global macro headwinds.

RBC kept its sector perform rating while raising its price target to $170 from $165, saying the YUM story is starting to look more compelling as investors have clarity on the Cyclospora impact.

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