NEW YORK (AP) — Janney Capital Markets cut its earnings estimates for Yum Brands Inc. citing potential weakness in China, with the fast food company scheduled to post fourth-quarter earnings after the bell.

Analyst Mark Kalinowski maintained a 'buy' rating Monday on the parent company of KFS, Taco Bell and Pizza Hut.

The favorable rating is largely based on its growth potential outside of the United States, noting that emerging markets currently account for about 60 percent of its operating profit. But China is the exception, Kalinowski said.

Kalinowski sees China dragging on results and he lowered both his 2013 and 2104 earnings predictions for the Louisville, Ky., company.

"We believe that incremental news out of China — Yum's most profitable and important market — is likely to be mostly ... disturbing," Kalinowski wrote.

The analyst lowered his 2013 profit prediction by 12 cents to $3.53 and 2014 prediction by 13 cents to $4.10 per share. Analysts, on average, expect 2013 and 2014 profit of $3.57 and $4.14, respectively.

Kalinowski said the cuts reflect the possibility that problems in China will stymie results in that region for longer than previously expected. He added that his "Buy" rating particularly applies to long-term investors and that short-term investors should remain aware that things could be choppy for some time.

Yum shares fell 5 cents to $65.88 in premarket trading.


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