Sean Dunlop, CFA

We initiate coverage of Wendy's with a no moat rating, Standard capital allocation, and fair value estimate of $21.50 per share.

Shares of the narrow-moat company look fairly priced.

We maintain a positive view of management's approach to increasing partner wages (a crucial investment to fully staff stores and compete for market share) and channeling capital toward store technology and kitchen equipment. Nonetheless, these investments pose a 400 basis-point margin drag in the near term, leading us to maintain our $109 fair value estimate as time value of money, wage investments, and sustained market share gains offset--leaving shares looking fairly valued.

We anticipate a low-single-digit increase to our fair value estimate and view shares as fairly valued.

One company's bad news from China doesn’t mean trouble for the coffee giant.

We're raising our fair value estimate to $234 per share for the wide-moat fast food company.

We anticipate raising our Starbucks fair value estimate to $109 from $107 prior, on operational improvements, an impressive ability to defray inflationary pressure, and sustained strength in consumer-packaged goods.

The firm's U.S. market, boosted by stimulus spending and February's chicken sandwich launch, healthily exceeded 2019 levels on a two-year stacked basis.

Strength in the U.S. market was encouraging, and we modestly raise our fair value estimate.

As restrictions ease, we expect a sharp jump in demand.