Seeking Alpha

Goldman starts Burger King Worldwide at Buy, sees sustained 18-20% EPS growth

  • Goldman Sachs initiates coverage on Burger King Worldwide (BKW) with a Buy and $25 price target, offering 23% upside at current levels. Firm cites international growth and upcoming recapitalization.
  • "We see BKW as being in the "Fountain of Youth" phase of its lifecycle, with accelerated international expansion to come, much of which will be in fast-growing emerging markets," analyst Michael Kelter said.
  • Firm forecasts the potential for sustained 18-20% EPS growth driven by i) 5-7% annual unit growth as BKW’s well-capitalized and incented "master franchisees" build units around the world, ii) 2-3% same-store sales growth driven mainly by overseas performance, iii) 2-3% annual margin expansion as increased royalty streams lever its fixed cost infrastructure, and iv) 7-8% from FCF deployment in light of a model that requires almost no capex.
  • BKW closed at $20.38 Friday, with a 52-week range of $15.02-$21.73.
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