As the world crawls out of its pandemic economic hibernation, many fast-food chains are well positioned for continued success. One of those, the Wendy’s Company (WEN), is currently on track to beat its Q3 expectations, and has been seeing growing traffic to its restaurants. However, labor shortages and inflationary forces are posing challenges to the world’s third-largest hamburger chain.
Delineating his bullish hypothesis on the company is Nick Setyan of Wedbush Securities, who wrote that Wendy’s could see “accelerated top- and bottom-line growth in a post-COVID environment.” Additionally, he mentioned that the firm has a place on the “Wedbush Best Ideas List,” which includes the investment firm’s top stock picks for the month. (See analyst’s top stock picks on TipRanks)
Setyan rated the stock a Buy, and provided a price target of $28.50. This target suggests a possible 12-month upside of 28.49% from Wednesday’s closing price of $22.18 per share.
The five-star analyst went on to say that the company has been experiencing particular growth in breakfast foods, which are projected to meet their targets by the end of next year. Wendy’s has also been expanding its abilities regarding delivery and digital segments, and is seeing increased levels of customer loyalty to its brand.
Beyond these positives, the fast-food chain has been innovating on its menu options, and has been tackling its staff shortages by investing in operational initiatives.
Along with most of the economy, inflation has been a factor which must be priced into any company’s future balance sheet. For Wendy’s, Setyan does not expect detrimental impacts from rising commodity and labor costs to be greater than those forecasted by the firm’s management. This allows the analyst to maintain his upbeat opinion on the company’s EBITDA guidance.
On TipRanks, WEN has an analyst rating consensus of Moderate Buy, based on 11 Buy and 5 Hold ratings. The average Wendy’s Company price target is $27.37, representing a potential 12-month upside of 23.40%.
Disclosure: At the time of publication, Brock Ladenheim did not have a position in any of the securities mentioned in this article
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