Earlier this year, famous fast-food establishment Burger King (NYSE: BKW) made headlines when they acquired Canadian coffee chain Tim Hortons (NYSE: THI) for roughly $11 billion. On December 10, RBC Capital Markets analyst David Palmer upgraded his rating on Burger King from Hold to Buy and raised his price target from $30 to $38. The analyst anticipates that the combined companies will generate value through cost discipline, returning profit to shareholders and increase stock growth.
He noted, “We believe that Burger King will apply cost disciplines to Tim Hortons similar to what 3G Capital employed with Burger King and other companies in beverages and packaged food.”
Palmer believes the deal may lead to more acquisitions and mergers in the fast-food sector, as Burger King’s majority shareholder, 3G, “has had a history of acquiring bigger and bigger companies as it creates a conglomerate, appreciating emerging market growth, and seeking out refranchising opportunities.”
Palmer currently has a 77% success rate recommending stocks with a +13.7% average return per recommendation.
David Palmer’s past recommendations
Palmer has experience in recommending stocks in the food and beverage industry, including Starbucks Corp (NASDAQ: SBUX) and Yum! Brands (NYSE: YUM).
Palmer last recommended Starbucks with a bullish rating on October 31 when the stock was $75.25 a share. Since then, the stock has gone up to $82.66 a share. In total, Palmer has rated Starbucks nine times, earning an 88% success rate recommending the stock.
On the other hand, Palmer reiterated a Buy rating for Yum! Brands on July 30 of this year when the stock was $72.56 a share. Since then, the stock has gone down to $70.53 a share. Palmer has rated Yum! Brands 11 times with only a 22% success rate.
Conclusion
The Burger King and Tim Horton’s merger has made investors happy so far with Palmer remaining bullish. Do you trust his latest recommendation based on his financial advice history?
