Analysts Remain Bullish on Yum! Despite Concerns of Avian Flu, Comps in China‏

Yum! Brands (NYSE: YUM) will report fourth quarter 2013 results on February 3 after the market closes.

Shares of Yum! Brands returned slightly over 1% for the past 12 months and are down 12% in 2014. Analysts note cyclical lows, disappointing China's Same Store Sales in December, Avian flu concerns in China and weakness in EM-focused stocks. According to the BenzingaPro Calendar, fourth quarter EPS estimate is $0.80 and $4.26 billion in revenue.

Yum! Brands plans to open approximately 1,750 new unit in 2013, with 700 new restaurants in China. This China sector has been and will continue to lead the market for the company's success. With the decline of the share price and Asian market opportunities, analysts modify estimates and maintain Bearish view.

The BenzingaPro Calendar shows that nine analysts have Buy ratings, ten hold ratings and no Sells for Yum! Brands. Bloomberg data reveals that the average price target is $80.00 with the street high at $95.00 under Stifel and at $65.00 under Janney Capital Markets.

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Deutsche Bank Markets Research analyst Jason West maintained a Buy rating and $90 price target. West noted that he believes that the bird flu and EM fears are already priced in and sees this weakness as a prime opportunity to buy shares. The analyst estimates fourth quarter EPS at $0.79, $0.01 below consensus. Deutsche Bank lowered 2014 estimates from $3.58 to $3.55 to better reflect recent f/x weakness.

S&P Capital IQ reiterated risk and near-term concerns in China. Analyst Schmidtt commented that he believes YUM! will recover from bird flu concerns but noted that this recovery is slower than expected. The analyst expects revenue to fall 3.1% in 2013 following an 8% gain in 2012. Schmidtt added that he sees same-store-sales declining 14% for China KFC, but up 1% for Yum! Restaurants International and 0.8% for U.S. operations. S&P Capital has a Hold rating and $74.00 price target on Yum! Brands.

Bank of America Merrill Lynch remarked on the dependence of U.S. and YRI businesses to perform well to help make up part of the near-term earnings shortfall in China. The analyst commented, “There are risks to our price objective in both directions. Yum shares could be weaker than we anticipate if China sales issues that began in the 4Q of 2012 last longer than anticipated. Conversely, earlier-than-anticipated recovery in China sales could push Yum shares higher.” Bank of America has an $82.00 price target on Yum! Brands.

Yum! Brands will hold a Conference Call on February 4.