July 1 (Reuters) - Goldman Sachs upgraded Yum Brands Inc (YUM.N) to “buy” from “neutral” and said it had a more positive view on the prospects for profit growth at the company’s international businesses.
Goldman analysts, including Steven Kron and Joseph Fischer, also said they were more positive on the parent of the Taco Bell, Pizza Hut and KFC chains’ improving U.S. business and overall corporate margins.
“Our upgrade reflects a longer-term view of a secular story that we think investors should be behind, not because of the next quarter, but because of the next couple of years,” the analysts wrote in a note to clients.
The analysts said while they were only marginally more optimistic about the company’s U.S. operations, more tangible product platforms and greater focus on operational costs will turn the business into a “profit grower instead of a perennial operating drag.”
Yum’s overseas businesses, other than China, will likely exceed the targeted 10 percent profit growth, as greater visibility on the company’s strategies will drive sustainable and profitable growth, Goldman analysts said.
The analysts raised their price target on the stock to $40 from $36.
Shares of the Louisville, Kentucky-based Yum closed at $33.34 Tuesday on the New York Stock Exchange. (Reporting by Tenzin Pema in Bangalore; Editing by Anne Pallivathuckal)