Goldman Removes Wendy's From 'Conviction Buy' List Following Q2 Earnings

Analysts at Goldman Sachs no longer feel that Wendys Co (NASDAQ: WEN) should be a part of its "Conviction Buy" list following the burger chain's Q2 earnings result.

In a research report on Wednesday, analyst Karen Holthouse acknowledged Wendy's remains a "compelling longer-term cash flow story" but its near-term is clouded with uncertainty.

According to Holthouse, there's a "lack of visibility" into the comp improvement story. Specifically, the company's plans for brand and core advertising are creating "less of a call to action" and the most recent quarter also served as an example of "limited time offers missing expectations."

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The analyst also added that Wendy's attempt to work with franchisees on a price versus traffic trade off solution could remain a comp headwind. On the other hand, re-franchising and re-modelling initiatives "continue to hit guided marks and there is a growing stream of property revenues along with the potential for additional cost opportunities as "a cushion against comp volatility."

Despite being removed from the "Conviction Buy" list, Holthouse maintained a Buy rating but with a price target lowered to $11 from a previous $12.50.