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Yum China Holdings Inc. (NYSE:YUMC) has experienced a volatile year. Although its stock is up 4% year-to-date, it has fallen nearly 17% over the past year.
Despite a 27.8% rally in the past month, the current trend remains moderately bearish. The stock is facing selling pressure, which suggests continued downside risk.
The technical indicators are sending mixed messages for Yum China stock.
Chart created using Benzinga Pro
On the one hand, the stock price of $44.31 is below its eight-day and 20-day simple moving average (SMA) of $46.73 and $44.53, respectively, signaling short-term bearishness.
However, Yum China stock is trading above its 50-day SMA ($38.12), suggesting longer-term buying potential.
With its 200-day SMA at $37.08, Yum China continues to hold a bullish stance from a broader perspective.
Despite the bearish technical short-term indicators, BofA Securities recently raised its price target on Yum China from $41.60 to $49.00, citing robust same-store sales growth, margin improvements, and a favorable exchange rate for the Chinese yuan (RMB).
BofA also highlighted the company’s aggressive share buyback program and the positive valuation shift in Yum China's stake in Meituan (OTCPK:MPNGF). The firm’s optimistic outlook is that Yum China is weathering near-term challenges, including market fluctuations tied to the upcoming U.S. elections.
With Yum China set to open hundreds of new K-Coffee cafes and expand its Pizza Hut WOW model, the company’s long-term growth prospects look promising.
However, with technical headwinds and analyst sentiment divided, it’s a critical moment for investors.
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