Restaurant Brands (QSR) PT Lifted to $48 at RBC Capital Amid Strong Q2

RBC Capital analyst David Palmer reiterated an Outperform rating and boosted his price target on Restaurant Brands International (NYSE: QSR) to $48.00 (from $46.00) following strong Q2 results, citing brand momentum and cost discipline. Palmer said while FX remains punitive, they expect continued SSS momentum and dramatic YOY cost reductions for the remainder of the year.

The analyst commented, "We are raising our Price Target from $46 to $48 and our 2015 and 2016 EPS estimates from $1.01 and $1.33 to $1.04 (+22% YOY) and $1.35 (+29 % YOY) following better than expected 2Q results ($0.30 vs. RBCe $0.26; cons $0.24). While FX headwinds could amount to a -9% and -2% impact to 2015 and 2016 EBIT, we expect continued SSS momentum at both brands and dramatic YOY overhead reductions for the remainder of 2015 with additional savings into 2016. We model 2H global SSS growth of 3.6% and 4.1% for BK and TH, respectively versus 2% and 2.5% prior. We also account for the company's mid-2Q refinancing, which will likely amount to a $65M reduction in annual interest expense ($0.10 interest savings in '16), and is not completely reflected in consensus. Our $48 price target equates to 36x our 2016 EPS estimate of $1.35 or 26.5x the PV of our 2018 EPS estimate, reflecting the refinancing of preferred equity."

For an analyst ratings summary and ratings history on Restaurant Brands International click here. For more ratings news on Restaurant Brands International click here.

Shares of Restaurant Brands International closed at $40.09 yesterday.

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