Wendy's (NASDAQ:WEN) was cut to Neutral from Overweight at JPMorgan, with a new price target of $19, down from $22 per share in a note Wednesday.
Analysts said the stock is likely to remain range-bound as its competitive price and capital intensity picks up.
"Wendy's reported 4Q23 results with US comps of 0.9% vs. our ~flat expectation and international comps of 4.3% vs our 5.0%. US pricing of ~5% was offset by 2% declines in both traffic and mix," explained the analysts.
"Many within the core QSR consumer base are increasingly focused on value as y/y grocery pricing is now >450bps below LSR pricing (January 2024) and 'price certainty' increases in importance within the category," they added.
JPMorgan sees the sector shifting back to pre-Covid menu strategies demonstrated by single items sold at $1, $2, and $3 at McDonald's, ten items under $3 at Taco Bell or meals sold at $4, $5, and $6 at Wendy's.
"On the other hand, it's encouraging that brand-specific premiumization such as the Nacho Cheeseburger and Made to Crave menus continue to resonate to protect overall brand economics," concluded the analysts.