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Takeaways
- JPMorgan analysts on Monday upgraded Wendy's stock following the fast-food chain's latest earnings report.
- However, they also lowered their price targets amid the uncertainty in the fast food industry.
- McDonald's and Wendy's reported disappointing sales last week, and Wendy's said it's no longer expecting sales growth this year.
JPMorgan analysts upgraded Wendy’s (WEN), but they also lowered the price target, as they remain cautious in an uncertain fast food industry.
Wendy’s and McDonald’s (MCD), the burger-making rival, both reported weaker sales in the first quarter than analysts had anticipated. McDonald’s has said that economic pressures have spread from low-to-middle-income consumers to Wendy’s, which said sales could decline rather than increase in 2025.
JPMorgan analysts upgraded Wendy's stock to "overweight" from "neutral" on Monday, but said they now expect the stock to reach $15 by the end of 2026, rather than $17 previously.
The analysts are slightly more bullish than average on Wendy's stock, which has a consensus price target of about $14, according to Visible Alpha data. The target, above Wendy's Friday close of $12.55, comes as analysts are divided on how to rate the stock with two "buy," four "hold," and three "sell" ratings.
JPMorgan analysts stated that Wendy’s current pricing “provides a valuable opportunity, as we see significant upside,” adding that the fast-food company has room to improve free cash flow by “focusing more on franchise accountability” and growing its international footprint. Analysts cautioned that a 2% drop in fast-food traffic from the previous quarters and levels pre-pandemic was a cause for concern.
Wendy's shares were up 3% in early trading Monday. Still, they've lost about a fifth of their value since the start of the year.
