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Banc of America upgraded Tricon Global Restaurants (YUM
) to buy from market perform.
Analyst Andrew Barish says he upgraded because the company's same-store sales trends are moving in the right direction at Taco Bell and KFC. He says he's comfortable with the EPS estimates of $3.15 for 2001 and the newly introduced $3.50 estimate for 2002 based upon reasonable assumptions.
Barish expects EPS momentum to pick up after down Q1, and says the EPS could get back to trendline 15% growth for 2002. With shares trading at just 13 times the 2001 estimate and 11 times the 2000 estimate, Tricon's valuation is attractive. Barish has a $50 target, which represents 25% appreciation potential over the next 6-12 months.