Sector Snap: Analyst Rates Fast-food Companies

NEW YORK (AP) — Both Burger King Corp. and McDonald's Corp. will likely report profit and sales growth this year while Yum Brands Inc. may be hurt by the downturn in the global economy and currency exchange rates, a Robert W. Baird & Co. analyst said Friday.

Analyst David E. Tarantino initiated coverage on both Burger King and McDonald's with "outperform" ratings and started coverage on Yum Brands with a "neutral" rating.

He said in a note to investors that Burger King should deliver annual earnings per share growth of 13 percent to 16 percent and growth in same-store sales — or sales at stores open at least a year — of at least 2 percent to 3 percent.

"Our rating reflects a positive view of fundamentals, long-term prospects and valuation," he said, adding that he expects "solid near-term" results despite lower consumer spending and unfavorable exchange rates.

Tarantino said he expects earnings per share to rise 5 percent in fiscal 2009 and 10 percent in the third quarter.

The analyst has a $28 price target on the stock, meaning he expects the shares to rise 25 percent from Thursday's closing price of $22.43 in the next year.