Analyst Andrew Charles from TD Cowen maintained a Hold rating on Restaurant Brands International and keeping the price target at $70.00.
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Andrew Charles has given his Hold rating due to a combination of factors including the unexpected stock reaction despite Tim Hortons’ strong performance. He notes that the stock was already heavily invested in before the results, and there is a general expectation for better performance from Burger King, especially three years into the Reclaim the Flame initiative. Additionally, concerns about bad debt during the second quarter have not helped the situation.
Charles also highlights the risk to the company’s 2025 adjusted operating income guidance following a profitability miss in the second quarter. Despite management’s optimism about a turning point in the U.S. market, Burger King’s same-store sales are only modestly outpacing the quick-service burger category. The company faces challenges such as prioritizing franchisee profitability amid soft industry sales and high beef inflation, while competitors engage in aggressive promotional tactics. Furthermore, the anticipated improvements from remodeling activities and changes in franchisee ownership are expected to take longer than initially thought.