Top broker backs a tasty 20% upside for the Collins Foods share price

This ASX share could have plenty of upside ahead…

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Key points

  • Collins Foods shares are edging higher today
  • This follows a positive reaction from brokers to its recent full-year results
  • One broker sees tasty upside of over 20% for the KFC restaurant operator's shares

The Collins Foods Ltd (ASX: CKF) share price is edging higher on Wednesday despite market weakness.

In morning trade, the quick service restaurant operator’s shares are up 0.5% to $10.01.

Why is the Collins Foods share price pushing higher?

Investors have been bidding the Collins Foods share price higher after a number of brokers responded positively to the company’s full-year results.

Notes out of Macquarie, Morgans, and Wilsons reveal that their analysts have put the equivalent of buy ratings on the KFC restaurant operator’s shares.

What are brokers saying?

The team at Macquarie has retained its outperform rating with an $11.50 price target.

The broker was pleased with Collins Foods’ performance in FY 2022 and particularly its European operations. And while it acknowledges that costs will increase in the short term due to inflationary pressures, it remains positive.

It’s a similar story over at Morgans, where the broker upgraded Collins Foods’ shares to an add rating with an $11.50 price target.

Its analysts believe the Collins Foods share price is good value at the current level. Particularly given the company’s defensive qualities. Morgans is expecting demand for KFC to be resilient in the current environment. The broker also sees opportunities for the company to pass on higher costs through price increases.

Wilsons tip tasty upside for Collins Foods’ shares

The most bullish of the three brokers is Wilsons, which sees tasty upside for Collins Foods’ shares over the next 12 months.

According to the note, the broker has a buy rating and $12.10 price target on the company’s shares. Based on the current Collins Food share price, this implies potential upside of over 20% for investors.

Wilsons is also forecasting a fully franked dividend of 28 cents per share in FY 2023. This equates to a 2.8% yield, which stretches the total return to over 23%.

Motley Fool contributor James Mickleboro has positions in Collins Foods Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Collins Foods Limited. The Motley Fool Australia has recommended Collins Foods Limited and Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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