ATLANTA -- Concerned over the impact of SARS (severe acute respiratory syndrome) on Asian businesses, Atlanta-based SunTrust Robinson Humphrey lowered its rating of Yum! Brands, Inc., and cut the restaurant company's 2003 earnings estimates on April 16.
According to The Wall Street Journal, SunTrust analyst Howard Penney downgraded Yum to underweight from overweight and cut its current-year earnings estimate to $1.98 a share, down from $2.03. The Thomson First Call average analyst estimate for this year is $1.99 a share.
The Journal report said Penney based the cut on Yum's heavy dependence on international expansion for profits. (See Pizza Hut plans for 40 stores in S.W. China.) He estimates Pizza Hut and KFC operations in China alone account for as much as 11 percent of Yum's profits and 25 percent of its anticipated growth in 2003.
A Yum spokesman told the Journal its plans to build more than 1,000 international units this year remain on track.
Multiple Asia-based news outlets have speculated that the SARS outbreak has boosted pizza delivery in Asia, but that dine-in business has suffered for the same reason.