Restaurant Stock Slips After Analyst Downgrade

There's room for more analysts to jump on the bearish bandwagon

Deputy Editor
Jan 11, 2024 at 9:21 AM
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The shares of Yum! Brands, Inc. (NYSE:YUM) are down 0.6% before the bell, looking to open just below $128.50 after Wells Fargo downgraded the equity to "equal weight" from "overweight" and cut its price target by $15 to $135. In its bear note, Wells Fargo said it foresees the Pizza Hut parent's traffic to slow and price gains to moderate.

Following a May 2 record high of $143.25, Yum! Brands stock has shed 4.4% over the last six months. What's more, the equity is sitting at its year-over-year breakeven mark. Despite this, nine covering brokerages still rate the equity a "buy" or better, leaving room for more analysts to jump on the bearish bandwagon. 

Options traders look to have been ahead of the bearish sentiment, as YUM sports a 50-day put/call ratio of 1.11 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio ranks in the 78th percentile of the security's annual range, suggesting a larger-than-usual appetite for long puts of late.

Those looking to place bets with options can do so for a bargain right now. This is per Yum! Brands stock's Schaeffer's Volatility Index (SVI) of 15%, which sits in the 14th percentile of its annual range, meaning options players are pricing in relatively low volatility expectations right now. 

 
 

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