Habib Ur Rehman
2 min read
In This Article:
UBS raised its price target on Yum China Holdings (NYSE: YUMC) from $57.26 to $59.00 a few days earlier, while maintaining its Buy rating on the stock. The upward revision implies increasing confidence in Yum China’s long-term expansion prospects, particularly through an increasingly franchise-driven model.
According to the firm’s analysis, supported by UBS Evidence Lab data tracking restaurant locations across China, Yum China Holdings (NYSE: YUMC) is positioned to exceed its current goal of 20,000 stores by 2026. UBS now sees the company potentially reaching 30,000 locations by 2030.
A chef holding up a newly created dish, showcasing the creativity of the restaurant's menu offerings.
A key component of this expansion is the shift toward franchising. UBS projects that by 2030, franchise stores will make up approximately 30% of the company’s total, a sharp rise from 2024 levels. This transition is expected to unlock considerable capital efficiency benefits, which UBS believes are not fully reflected in current market expectations.
The firm also forecasts that this expansion model will support compound annual cash flow growth of 12% from 2026 through 2030. Such performance, in UBS’s view, should enable Yum China to deliver consistently strong shareholder returns over the latter half of the decade -- a key factor behind the decision to reaffirm the Buy rating. Previously we shared this bullish thesis on YUMC stock.
While we acknowledge the potential of YUMC as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.
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Disclosure: None.
