Shares of Burger King owner Restaurant Brands International jumped more than 3.4 percent on Wednesday after an Oppenheimer analyst said the company's acquisition of Popeyes was underappreciated by the market and upgraded the stock to outperform.
Brian Bittner bumped his rating to outperform from perform, saying the chicken chain provides a "massive new growth pipeline" for the company that Wall Street seems to be underestimating.
Despite having only 2,700 locations globally, Popeyes is the second-largest chicken player in the restaurant space, falling behind Yum's KFC, which has more than 21,000 locations.
Without the aid of Restaurant Brands International, Popeyes opened 149 units globally last year. Bittner equated this to Burger King's growth in 2010 when 3G Capital — the majority owner of Restaurant Brands International and the previous majority owner of Burger King — first acquired the brand, noting that the burger chain is now growing more than 700 units each year.
"[It is] a dynamic we believe it can replicate with [Popeyes] as it taps into its scale, its strong global roster of current franchisees and a chicken segment that is in need of a powerful No. 2 brand," Bittner wrote in a research note Wednesday.
Bittner sees Popeyes' unit growth rising 7 percent under the leadership of Restaurant Brands International, compared with its peers' growth of about 2.5 percent.
"We also believe [same-store sales] are set to accelerate from 1Q's flattish trend as comparisons materially ease, catalytic menu innovation rolls-in and technology opportunities unfold," Bittner said.
Bittner set his target price for the stock at $70, which is about 19.7 percent above Tuesday's closing level of $57.44.
Watch: Analyst on Popeyes' international growth potential