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Last week, J.P. Morgan analyst John Ivankoe hosted Bloomin’ Brands Inc (NASDAQ:BLMN), CAVA Group Inc (NYSE:CAVA), Brinker International Inc (NYSE:EAT), and Sweetgreen Inc (NYSE:SG) at the J.P. Morgan Las Vegas forum.
The analyst noted that the key takeaway from all four companies was the focus on doing “fewer things better” and consistently reinvesting in customer and employee experiences.
According to the analyst, stock volatility has created opportunities, with the current 10-year yield of 4.3% helping global QSR valuations, easing fears of a 5-6% yield.
The analyst recommended adding fresh investments in Dutch Bros Inc (NYSE:BROS), Starbucks Corp (NASDAQ:SBUX), and CAVA.
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While McDonald’s Corp (NYSE:MCD) and Restaurant Brands International Inc (NYSE:QSR) are fairly valued, slower U.S. data and international growth may present better buying opportunities, per the analyst.
Yum! Brands Inc (NYSE:YUM) exceeded expectations, benefiting from tech-fee recapture. Domino’s Pizza Inc (NASDAQ:DPZ) is fairly valued due to high expectations. It remains uncertain if the Middle East conflict’s impact will drive sustained sales growth or just a leveling out.
The analyst upgraded the shares of CAVA to Overweight. CAVA has significant potential for expansion in the U.S., with impressive free cash flow generation and a strong pipeline of operational and brand initiatives to drive sales and profits.
The analyst reiterated a Neutral rating on Chipotle Mexican Grill, Inc (NYSE:CMG) and EAT due to high valuations and peak comps, but remain cautiously optimistic and would consider adding on volatility.
Overweight-rated SG and Krispy Kreme Inc (NASDAQ:DNUT) face sales and profit challenges, with SG offering near-term potential through seasonal menus and loyalty programs.
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Following YUM’s Taco Bell analyst day on March 4, which highlighted the “Byte by YUM!” platform and improving KFC international trends, the analyst conducted a full model review and a valuation reset.
Projections include Taco Bell U.S. growing to 9,000 units by 2030 and Taco Bell International expanding to 2,000 units. The analyst assumes KFC international (excluding China) will increase to 22,300 units, while KFC China will reach 19,400.