Brian Harbour, an analyst from Morgan Stanley, maintained the Sell rating on Wendy’s (WEN – Research Report). The associated price target remains the same with $14.00.
Brian Harbour has given his Sell rating due to a combination of factors related to Wendy’s strategic initiatives and financial outlook. The company’s recent investor day highlighted ambitious financial goals extending to 2028, with expectations of accelerating growth in key performance indicators. However, these growth rates are not anticipated to be evident in 2025, which is projected to be a flat earnings year due to ongoing investments and unit growth that remains below its potential.
Another factor influencing the Sell rating is the company’s focus on operational consistency and customer experience, which, although potentially beneficial, has been an area of past underperformance. While improvements in operational leadership and standards could enhance margins and franchisee profits, the tangible impact remains uncertain. Additionally, the company’s efforts to accelerate unit development face challenges, particularly in the U.S. market, where closures have offset growth. The shift in capital allocation towards build-to-suit development may aid openings, but the overall progress towards new goals is expected to be less visible in the near term, contributing to a cautious outlook.