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Measurable Tailwinds into 2022: The Wendy's Company

  • Oppenheimer & Co. Inc.
  • November 16, 2021
Oppenheimer Analyst's Recent Upgrade Thesis Intact; Reiterate Outperform

Our analysts upgraded Wendy's to Outperform in August (8/18 at $23.65) and believe shares fly under the radar despite holding catalysts for upside from:

  1. An accelerating unit growth path that appears under-appreciated.
  2. Solid operating fundamentals despite turbulent industry dynamics.
  3. A 23% valuation discount to peers that highlights its overlooked risk/reward.

While elevating cost inflation represents an industry challenge, our analysts believe Wendy's 95% franchised model and preserved pricing power provide insulation. Into 3Q results, Oppenheimer analysts do reduce their '22E restaurant margins below consensus, but only lower '22 EBITDA estimates by <2%. Our analysts' model strongly supports a path to our $29 price target.

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