Yum hits 18-month high after upgrade

CHICAGO

Shares of fast-food company Yum Brands Inc. reached an 18-month high Tuesday after an analyst upgraded the restaurant chain, saying results at the company's brands are on track to improve.

UBS analyst David Palmer boosted his rating on the owner of KFC, Taco Bell and Pizza Hut to "Buy" from "Neutral." He also raised the price target on the company's stock to $44, up from $38.

Palmer, who credited better trends at Taco Bell, a $10 price for pizzas at Pizza Hut and new menu at KFC for the upgrade, along with increased confidence about the burgeoning market for fast food in China.

"While the U.S. aspect of this recovery could be fairly ugly, we believe that overall, Yum U.S. should be able to get through 2010 relatively unscathed on profits," Palmer wrote to investors in a research note Tuesday. "Looking past 2010, we are encouraged by the prospects for Yum in 2011 and beyond."

Early last month Yum, which is headquartered in Louisville, Ky., said its full-year profit climbed 11 percent to $1.07 billion, or $2.22 per share. Full-year revenue slipped 4 percent to $10.84 billion.

Yum shares climbed $1.19, or 3.4 percent, to $36.60 in trading Tuesday. Its shares reached as high as $36.99, a level not seen since September 2008.