Goldman Sachs made a big call in the fast-food space on Thursday: “Sell Guzman (GYG) and Buy Collins Food (CKF), or in junk food terms, sell Mexican and buy KFC. As has often been the case in 2024, their thesis was around relative valuations, with the hot new IPO GYG certainly looking rich to MM anywhere near $40. We have a couple of twists on the Goldman Call:
- There is still plenty of buying around in GYG, as we saw on Thursday, with the stock rallying ~4% from its early low following the analyst’s note. We can see GYG testing its 2024 high into Christmas when we would turn negative from a risk/reward perspective.
- From a valuation perspective, MM’s view is “Sell GYG and buy US peer Chipotle Mexican Grill (CMG US)”—obviously, this is not the purest of plays selling an ASX name to a US one, but we like the numbers.
MM is neutral GYG
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