NEW YORK (TheStreet) -- Credit Suisse initiated its coverage of Yum Brands (YUM) - Get Report with an "underperform" rating on Wednesday.

The analyst firm set a price target of $74 for the fast food restaurant operator. Credit Suisse analysts expect Yum Brands to report earnings of $3.20 a share for 2015, $3.69 a share for 2016, and $4.14 a share for 2017.

Credit Suisse analyst Jason West said the rating and price target are based on a valuation call, and assume shares of Yum Brands are trading at 22x earnings.

West wrote, "We believe the pace of recovery in YUM's China business (~33% of profits) will be slower than expected due to weak macro trends and continued aggressive supply additions in that market, potentially causing an earnings miss this yr. Current valuation (24x NTM EPS) does not reflect those risks."

TheStreet Ratings team rates YUM BRANDS INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate YUM BRANDS INC (YUM) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its notable return on equity and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

• The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, YUM BRANDS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
• Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
• Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.6%. Since the same quarter one year prior, revenues slightly dropped by 4.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
• The gross profit margin for YUM BRANDS INC is currently lower than what is desirable, coming in at 29.92%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -2.15% is significantly below that of the industry average.
• Net operating cash flow has decreased to $437.00 million or 25.42% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
• You can view the full analysis from the report here: YUM Ratings Report