By Sam Boughedda
TD Cowen analysts upgraded shares of Restaurant Brands (NYSE:QSR) to Outperform from Market Perform, raising the firm's price target on the stock to $75 from $72 per share in a note to clients on Friday.
The analysts said TD Cowen is bullish on Burger King U.S. same-store sales upside under a new chairman and new CEO as a "capable brand president is granted autonomy to turn around the brand."
"We are bullish on RBI's new chapter given oversight by new Executive Chairman Patrick Doyle, whose tenure as Domino's CEO from 2010-18 can only be described as 'Hall of Fame' worthy," explained analysts. "Further, new CEO Josh Kobza is enacting a cultural change to allow greater autonomy for brand presidents that we expect to benefit BK U.S. (~19% of adj. EBITDA) given the capable brand leadership of Tom Curtis, who worked with Mr. Doyle at Domino's in operational & franchise relations roles."
Furthermore, the analysts believe the risk/reward on the stock favors upside.
"Following underperformance from 2018-22, we are bullish that the worst is behind BK U.S. as the brand navigates the early stages of a turnaround," the analysts added.
"While our upgrade might be early, based on our base & bear case analyses, we propose shares present a favorable risk/reward set-up given greater than 1:1 upside to downside ratio. Further, we argue a floor exists on shares due to the bullish narrative around Mr. Doyle, who purchased $30M of stock at ~$60/share with a 5-year lock-up."