02:53 PM EDT, 10/28/2024 (MT Newswires) -- Wendy's (WEN) Q3 results are likely to be "sluggish" due to macro pressure though the company's Q4 is off to a "strong start," UBS said in an earnings preview Monday.

The investment firm expects Wendy's to post flat Q3 same store sales in the US, which compares with consensus expectations for 1.3% growth.

UBS is also forecasting Q4 US same store sales growth of 5.5%, above the consensus of 2.5%, with upside mainly driven by menu innovation, the firm said.

According to the firm's research, the SpongeBob Kollab, which launched in early October, is driving a "significant acceleration" in same store sales trends because it resonates with a younger audience and families.

The firm also pointed to a "solid pipeline for new menu items" as a driver for sales.

The firm maintained its neutral rating on the stock and raised its 12-month price target to $20 from $18.

Shares of the fast food company were up almost 4% in recent trading.

Price: 20.30, Change: +0.76, Percent Change: +3.86