Burger King Holdings Downgraded at Wedbush Morgan

Financial news reports this week that investment banking firm Wedbush Morgan downgraded Burger King Holdings from “Outperform” to “Neutral.” An analyst explained that there was further deterioration in BKC’s European markets, and continued same-store sales deceleration globally. Wedbush cut its price target on the stock to $17 from $19, closing at $17.47 last Friday.

A report from Dividend.com stated:

The analyst noted that “Aggressive Discounting and Franchisee Tensions Could Protract Rebound..We believe there are more compelling QSR opportunities…Franchisee lawsuits and recent National Franchisee Association (NFA) conference call demonstrate strained relations…SSS recovery and LT growth targets are at risk.”

Burger King shares fell 29 cents, or -1.7%, in premarket trading on Monday.

Wedbush said that they have avoided shares of BKC since their early June coverage began last year, when the shares were trading at $28.25. They are not recommending the stock at this time, holding a Dividend.com DARS Rating of 2.9 out of 5 stars.

StreetInsider.com gave this analysis:

McDonald's (NYSE: MCD) is the more compelling investment. BKC’s shares have appreciated 16% in the last month vs. 0% at MCD. For investors interested in global fast food exposure, our top pick would be MCD (Outperform, $62 PT) which currently trades at just 13.3x 2010E and is posting stronger SSS and profit per store increases, and has greater potential for positive EPS revisions owing to its significant FCF and stronger fundamentals."

Tomorrow, Burger King will participate in the Bank of America Merrill Lynch Credit Conference at The Crowne Plaza Times Square in New York beginning at 7:30 a.m. Chief Financial Officer Ben Wells will present the company’s strategic overview.

Burger King currently operates approximately 12,000 restaurants in 50 states and in 73 countries. In 2008, Fortune magazine ranked burger chain among America’s 1000 largest corporations.

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