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

|By:, SA News Editor

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.