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Investing.com - RBC Capital has reduced its price target on Wendy’s (NASDAQ:WEN) to $9.00 from $10.00 while maintaining a Sector Perform rating on the stock. The new target sits close to Wendy’s current price of $8.97, with the stock trading near its 52-week low of $8.39 and down over 50% from its high of $19.97. InvestingPro data indicates Wendy’s is slightly undervalued based on its Fair Value assessment.
The price target adjustment follows what RBC describes as a "mixed" third-quarter performance from the fast-food chain. On the positive side, Wendy’s reported both top and bottom-line results ahead of consensus expectations. This comes despite InvestingPro noting that 13 analysts have revised their earnings downwards for the upcoming period, reflecting broader concerns about the company’s outlook.
RBC noted that company-owned stores outperformed franchisee locations, with same-store sales growing 400 basis points faster, which the firm views as evidence that operational improvements are successfully driving sales growth. The analyst also highlighted strong performance of Wendy’s "Tendies" product in October.
Less encouraging factors include Wendy’s expectation to close approximately 300 underperforming franchisee stores. RBC also projects marketing spending will decline by 9.7% in 2026 compared to 2024 levels, potentially creating headwinds for same-store sales growth. Despite these challenges, Wendy’s maintains a 6.24% dividend yield and has maintained dividend payments for 23 consecutive years, according to InvestingPro data.
The implied fourth-quarter guidance from Wendy’s falls below consensus expectations, contributing to RBC’s decision to adjust estimates and lower its price target on the stock. Wendy’s currently trades at a P/E ratio of 9.49, with analyst price targets ranging from $8.00 to $18.50, reflecting divided opinions on the company’s recovery potential.
In other recent news, Wendy’s reported impressive third-quarter earnings, surpassing analyst expectations. The company announced an adjusted earnings per share (EPS) of $0.24, exceeding the forecasted $0.20. Additionally, Wendy’s outperformed revenue projections, reporting $549.5 million compared to the anticipated $534.98 million. These results highlight Wendy’s strong financial performance in the recent quarter. The positive earnings report has drawn attention from investors and analysts alike. While analyst firms have not provided specific upgrades or downgrades in response to these results, the earnings beat suggests a positive outlook for the company. These developments are part of Wendy’s recent financial activities and may influence investor sentiment.
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