Goldman Sachs Sees Opportunity For Burger King To Take Market Share Away From McDonald's

Burger King Worldwide Inc BKW growing U.S. same-store sales and its willingness to invest in international expansion suggest in can gain market share from competitors, an analyst said Monday.

Goldman Sachs' Karen Holthouse resumed coverage of Burger King with a Buy rating and $39 target, saying recent tailwinds on the stock are likely to continue.

Burger King, up 45 percent year-to-date, traded recently at $33.13, down 4.8 percent.

The fast-food chain, expected to complete its $11 billion merger with Canada's Tim Hortons Friday, has been tinkering with its menu and offering promotional pricing while making system-wide renovations to its outlets.

Related Link: Goldman Sachs Says McDonald's Is Losing Ground

Holthouse, citing a Goldman Sachs survey, said the work has resulted in "improved perceptions of both value and quality" among consumers.

With McDonald's posting continued declines in same-store sales, Holthouse smells an opportunity for Burger King to gain market share.

Further, Burger King's net growth in international units is up more than seven times since 2006, earning the company "some benefit of the doubt" on international prospects.

Its pending deal with Tim Hortons "shows a willingness" to take on debt and offers a new reason for "long-term optimism" regarding its international business, Holthouse said.

Holthouse "take no position" on Burger King's pending merger with Tim Hortons. The Brazilian private equity firm 3G Capital Partners, which owns a majority stake in Burger King, teamed with Warren Buffett's Berkshire Hathaway to finance the Tim Horton deal.