Loop Capital upgraded Restaurant Brands International (NYSE:QSR) to a Buy rating (From Hold) and set their 12-month price target at $81.00 for the stock following the company's “better-than-expected” results from the latest checks.
Loop Capital's latest Burger King checks show same-store sales have been on the rise, increasing by around 8.5-9.0% from the beginning of the quarter until late September. The increase outpaces the consensus expectation of a 7.7% increase for the third quarter. When you look at a two-year comparison, this growth of 8.5-9.0% translates to a substantial gain of 12.5-13.0%, a significant leap compared to Burger King's reported two-year domestic growth of 8.7% in the second quarter of 2023.
Burger King introduced Royal Crispy Wraps on August 14th. The new wraps have sold surprisingly well, generating an estimated 300-350 bp lift to same-store sales to date.
The same-day introduction of Burger King’s new Honey Mustard Royal Crispy Chicken Sandwich drove an estimated 100-150 bp lift to same-store sales over the last six-plus weeks.
Loop Capital has updated its projections for Burger King's same-store sales growth in the U.S. and Canada, now estimating an 8.5% growth rate for the third quarter of 2023, up from 6.0%. For the full year 2023, they are projecting a 7.4% growth rate, from the previous estimate of 6.0%. Looking ahead to 2024, their estimate is a 4.0% growth rate, up from the earlier projection of 2.0%.
As a result, EPS estimates increase to $0.88 for the 3Q (up $0.02). For the full year 2023, the new EPS estimate is $3.26, up by $0.05. For 2024, the EPS estimate has been raised by $0.05 to $3.50.
Shares of QSR are up 1.78% in pre-market trading Friday morning.