Burger King Downgraded on Discounting and Poor Franchisee Relations
January 19th, 2010
Credit Suisse today downgraded Burger King due parttly to "raised expectations" of the $1 double cheeseburger offer which might not be sustained, as well as recent tensions with franchisees. Burger King was lowered from outperform to neutral, with a $2 stock price target decrease, to $21.
At the same time, McDonalds was upgraded, to outperform, and a $2 increased stock price target of $71.
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"Follow The Money"
That old saying, "Follow The Money" is alive and well...and should act as an object lesson to franchisors (both publicly traded and private). A QSR analyst lowered the price objective on BK by $2 due, in part, to franchisee discord. From a valuation standpoint, that's around a $250 MILLION hit to perceived shareholder future value (based on 127.8 million shares outstanding)!