Restaurant Brands International Inc. (NYSE: QSR) has enjoyed a prosperous 2019. On top of a craze about chicken sandwiches, its shares have soared by over 25% so far in 2019. This fast-food giant was formed in 2014 after private equity firm 3G Capital backed the merger of Burger King and Tim Horton’s. Now Restaurant Brands has added Popeye’s Louisiana Kitchen under its umbrella.

Despite such a strong performance in 2019, the independent research firm Argus has initiated coverage with a Buy rating. The firm’s $90 price target is almost $20 higher than the consensus analyst target price of $70.50 (from Refinitiv), and it was $14 higher than the street-high target of $76.

As far as why the firm sees so much upside, the thesis is that the company can grow in international markets through master franchise joint venture agreements in a manner that is very similar to Burger King already has done. On top of opening new stores, Argus noted that comparable store sales growth can be seen from more deliveries, from its “daypart” expansion and by its move into plant-based products.

Argus now expects an operating margin of 37% in 2019, down from 38% in 2018, as the margin compression should reflect higher promotional spending from the Burger King side, more investments in the Tim Horton’s brand and also from higher wages. In 2020, Argus expects that the company will see some cost synergies from its acquisition of Popeye’s that should help to lift the margins. The firm’s earnings per share estimates are $2.80 for 2019 and $3.30 for 2020, and its long-term growth estimate is 16%.

The $90 target price implies a multiple of 27.2 times Argus’s 2020 earnings estimate and is more or less in line with its peer group. Along with a 2.8% dividend yield, the Argus call offers implied upside of 27% on a total return basis. That is handily higher than the 8% to 10% implied upside in most new Buy and Outperform ratings on S&P 500 and Dow Jones industrial companies.

John Staszak of Argus said in his report:

Restaurant Brands International has a well-developed corporate strategy and a long history of increasing margins, which should result in better-than-expected earnings. In addition, all of the company’s brands should be able to grow for many years to come in international markets. Lastly, the dividend yield of about 2.8% is significantly above average. Management is shareholder friendly and has raised the dividend 13 times since the beginning of 2015.

Shares of Restaurant Brands International were up almost 2% at $72.70 shortly after the opening bell on Tuesday. UPDATED FOR CLOSING PRICES: Shares of Restaurant Brands International closed up 3.46% at $73.95 on 2.28 million shares for a abnormal gain but roughly in-line on average trading day of volume. They have a 52-week range of $50.20 to $79.46 and a consensus sell-side target price of $70.50. The chain also comes with a dividend yield of almost 2.8% and a market cap that is $18.7 billion.

As a reminder, and despite that larger Burger King brand dominating the Tim Horton’s brand, Restaurant Brands International’s headquarters are in Toronto, Canada.

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