Pizza Hut sale would sharpen Yum’s focus on faster growing Taco Bell and KFC

Investing.com -- TD Cowen upgraded Yum Brands, saying a likely sale of Pizza Hut would sharpen the company’s focus on faster growing units and lift its long term development profile.

The broker said spinning off Pizza Hut, which accounts for about 12 percent of projected 2025 operating profit, would help Yum return to a best in class net restaurant growth rate and centre investor attention on Taco Bell, the company’s strongest asset.

Cowen set a downside scenario of 142 dollars and a base case of 173 dollars.

Analysts said a separation would mark the start of a new chapter under chief executive Chris Turner, who is pursuing strategic alternatives for Pizza Hut to bolster Yum’s growth.

In meetings with management, Cowen said the company is positioning for a quicker trajectory built on Taco Bell same store sales outperformance and renewed KFC expansion.

Cowen expects Yum, excluding Pizza Hut, to recover to about six percent net restaurant growth and deliver about three percent same store sales across the portfolio, supported by Taco Bell’s track record.

The broker argues that Taco Bell’s US stores could reach targeted average unit volumes of three million dollars by 2030. It forecasts same store sales of about four and a half percent in 2026 to 2030, ahead of consensus estimates.

Analysts said this outlook supports a valuation of twenty three times forward earnings, in line with the company’s five year average. They estimate the Pizza Hut sale could generate about 3.4 billion dollars after tax.

Cowen noted that development disruption may continue into 2026 due to elevated Pizza Hut closures as the chain is prepared for a sale. Even so, it sees a return to about five percent net restaurant development as achievable.