McDonald's Upgraded At Stephens, Firm Sees 16% Potential Upside

In a report published Monday, Stephens analyst Will Slabaugh and associate Billy Sherrill upgraded McDonald's Corporation's

stock, from Equal-Weight to Overweight, and raised their price target from $90 to $105. The stock is up about 1.05 percent on Monday, to $90.50. The upgrade seeks to reflect an increasingly attractive risk/reward profile, including a 4 percent dividend yield which -the firm believes- carries very low risk. According to the report, the analysts “think there are a number of levers at management's disposal to both improve fundamental performance of the business and support a higher stock price. These primarily include menu improvements, refranchising, and taking on additional leverage.” In addition to the upgrade and the increase in its target price, Stephens revised its estimates for the company. FY15 adjusted EPS estimates were trimmed to $5.25 (from $5.50), and projections for FY16 were introduced. For the latter, the firm expects EPS of $5.75, and Global SSS growth of +1.8 percent (versus +0.2 percent for FY15).