Is An Activist Investor Behind McDonald's Rally? This Morningstar Analyst Thinks So

McDonald's Corporation MCD has rallied significantly in the last few weeks and up 10 percent for the month of February. What's driving this rally when the company is underperforming in the restaurant sector?

Morningstar analyst R.J. Hottovy was on CNBC recently to answer that question.

What's Causing The Rally?

"There isn't one particular thing that there you can point to, Hottovy said. "We did see some heavy call activity earlier in the week, which I think is pulling up the stock and I think the bigger question is what is driving that call activity. I think you can really point to two things" I think sentiment towards the new CEO, but I think the market generally accepts that Steve Easterbrook has got a long path ahead of him to turnaround this business."

Likelihood Of An Activist Investors

He continued, "I think, more directly, probably you have an activist investor or at least rumors of an activist investor behind the scenes that could be pushing up the stock as well. I think this name has attracted a lot of interest from that front."

Going The Burger King Way

When asked what changes should the company make to get back on track, Hottovy replied, "I think taking a page out of what 3G did with Burger King is also helpful, fewer but more impactful items I think would be a great thing."

"Re-imaging I think in some of the local markets, what they have done in Europe, I think they have done a great job there, but I think they have to tailor that to each regional situation. You can't have a one size fits all approach. And I think just generally if you look at some of the other things, just refranchising also if you take a look and tie executive compensation may directly to the franchisee profitability."