Investing.com -- Evercore ISI added Wendy’s Co to its Tactical Outperform list ahead of the company’s investor day on March 6, citing discounted valuation, a potential industry turnaround, and an upcoming $200 million share repurchase as key drivers for near-term stock gains.
Wendy’s trades at a more than 30% discount to global franchised peers, and brokerage sees potential for a 10-15% boost to the stock if the valuation gap narrows.
The firm also expects Wendy’s to focus on menu innovation and quality improvements to regain market share amid intensifying competition from McDonald’s (NYSE:MCD) and high-growth chicken chains like Chick-fil-A and Popeyes.
While fast food value perception remains challenged and Wendy’s is overexposed to low-income consumers, Evercore believes turnarounds are still possible. WEN is one of many SMID-cap restaurant stocks that is near historical lows as the industry enters an M&A and business-friendly environment.
Wendy’s shares have fallen 12% in the past month and 25% over the past year. With daily trading volume of 4 million shares, which roughly translates into $70 million in value, Wendy’s “repurchase activity could prove to be a meaningful technical support heading into the analyst day,” according to analyst at Evercore.
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