Barclays Digs Into McDonald's Turnaround 2.0

In a report published Tuesday, Barclays analysts maintained an Overweight rating on McDonald's Corporation MCD, with a price target of $105. McDonald's outlined details of its Turnaround plan dubbed "2.0" by Barclays. As part of its new turnaround strategy, the company increased its refranchising efforts besides reducing G&A spending. "These efforts gave confidence to increase their cash return to shareholder target, with help from a modest boost to leverage," the analysts stated. The company is, however, still considering real estate monetization and other actions to enhance shareholder value. As part of its efforts to boost operational efficiency, McDonald's outlined a new organization structure depicting four market segments, each combining markets with similar requirements, challenges and growth opportunities. The analysts commented, "…a broad based turnaround is the top priority for the newly promoted CEO Easterbrook. And while we believe the turn will come, reversing trends at 36k global restaurants will take time." The EPS estimates for 2015 and 2016 have been reduced from $4.80 to $4.75 and from $5.25 to $5.20, respectively.