Yum Brands Third-Quarter Earnings Likely Weighed Down by Cyclospora Outbreak, UBS Says

04:13 PM EDT, 10/23/2026 (MT Newswires) -- Yum Brands (YUM) could take a hit to its third-quarter earnings from the Cyclospora outbreak that ended in September, UBS Securities said in a note Friday. The outbreak, which caused more than 12,000 illnesses across 21 states, originated from Taylor Farms de Mexico's iceberg lettuce served at several Taco Bell locations, according to information posted on the US Food and Drug Administration's website. Taco Bell stopped using lettuce from that supplier in July. Cyclospora infection causes diarrhea in most people, with loss of appetite, weight loss and stomach pain among other common symptoms. The Centers for Disease Control and Prevention declared the outbreak over on Sept. 11. UBS lowered its third-quarter earnings-per-share estimate to $1.35 from $1.58, below the $1.51 consensus. It cut the fourth-quarter outlook to $1.67 from $1.95, compared with the Street's $1.83 view. Analyst Dennis Geiger expects Taco Bell's same store sales to have declined 5% in the third quarter, versus consensus estimates calling for a 2.8% drop. Yum Brands is scheduled to publish its third-quarter results on Nov. 3. "While (Taco Bell) momentum may not have fully returned yet, we continue to view the pressures as transitory and expect the brand will resume its strong growth trajectory and outperformance reasonably soon," Geiger said. UBS expects Taco Bell's comparable sales to turn positive in the fourth quarter. The company's shares declined 3.1% on Friday, and are down 1% so far this year. Yum Brands, however, remains well positioned for long-term growth following the Pizza Hut separation, supported by a Taco Bell rebound and projected gains at KFC, UBS said. Earlier this year, Yum Brands sold Pizza Hut in two transactions valued at about $2.7 billion. "(The company's) brands remain well positioned globally, supported by sales drivers (including) benefits from Byte, with multiyear unit expansion and earnings growth set to accelerate post the Pizza Hut separation," Geiger said. Byte is an AI-powered platform to unify and modernize restaurant operations. Earlier in October, Domino's Pizza (DPZ) reported better-than-expected third-quarter results. Wingstop (WING) will post results on Oct. 28.