Why Analysts Are Favoring ‘Buy’ Recommendations for Wendy’s
Why Wendy's Share Price Fell 8.9% despite Strong 1Q16 Results
Analysts’ recommendations
As of May 11, 2016, Wendy’s Company (WEN), which forms 0.02% of the holdings of the iShares Russell 1000 Value ETF (IWD), was trading at $10.2. Wendy’s share price may have already priced in the estimates we discussed earlier in this series.
In this article, we’ll look at analysts’ recommendations and estimated price targets for the company over the next 12 months.
Analysts expect Wendy’s share price to touch $11.9 in the next 12 months, representing a return potential of 16.6%. On the higher side, Michael W. Gallo of C.L. King & Associates has forecast that Wendy’s share price will touch $14.5. On the lower side, Keith Siegner of UBS Investment Bank has forecast that Wendy’s share price will reach $9 in the next 12 months.
The 12-month price targets for Wendy’s peers are as follows:
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McDonald’s (MCD): $132.7 with a return potential of 1.8%.
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Jack in the Box (JACK): $81.3 with a return potential of 8.3%
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Restaurant Brands International (QSR): $45.3 with a return potential of -13.5%
Analysts’ recommendations
According to a Bloomberg consensus, of the ten analysts surveyed, 52.4% have “buy” recommendations for Wendy’s, 42.9% have “hold” recommendations, and 4.8% have “sell” recommendations. Wendy’s share price generally moves in tandem with analysts’ recommendations. As analysts raise their consensus target price, the price of the stock may also increase, and vice versa.
A share price that is lower than its target price doesn’t indicate an automatic “buy.” Before investing, investors should carefully analyze the various metrics we’ve discussed in this series.
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