Wendy's shares plummet, analysts see opportunity for investors

In the United States on May 5, 2025, investment bank JPMorgan announced an upgrade of Wendy's shares from neutral to overweight, despite lowering its price target by $2 to $15. This adjustment suggests a potential upside of over 19% from the stock's previous close. Wendy's share price has seen a significant drop, falling more than 36% over the past six months, and more than 23% this year. This decline comes at a time when the S&P 500 index only reduced by more than 1% and more than 3% in similar time frames. Analyst Rahul Krotthapalli observed that the current price could present a value-oriented opportunity for investors, citing an expected free cash flow yield of 6-7% for fiscal years 2026 to 2028. The report indicates that Wendy's is also likely to see substantial growth in free cash flow, forecasting a total of $605 million from 2025 to 2028 as the company stabilizes and enhances store performance, which might yield annual shareholder returns in the mid- to high teens. Furthermore, Krotthapalli predicts the opening of 700 new Wendy's locations, including 200 in the U.S. and 500 internationally, as part of a 2.2% annual growth rate. Despite the positive outlook from JPMorgan, Wendy's is currently less favored in market perceptions, with only five Wall Street analysts rating it as a buy as opposed to 21 who have given it a hold rating.