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Bank Of America Likes McDonald's Stock A Little More

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Bank Of America Likes McDonald's Stock A Little More

McDonald's Corp (NYSE: MCD) deserves a higher "McMultiple" given expectations for strong top-line trends, according to Bank of America.

The Analyst

Bank of America's Gregory Francfort maintains a Buy rating on McDonald's with a price target lifted from $215 to $220.

The Thesis

Street estimates call for McDonald's to show a 3.9-4.2 percent U.S. comp growth through the fourth quarter and these figures look conservative, Francfort said in a note. The company reported 4.5-percent comp growth in the first quarter and easier comparisons ahead to support estimates of 4.75-5 percent through the end of the year.

Over the medium- to longer-term, Francfort said McDonald's should show an acceleration in new store openings as its favorable store level profitability will become more attractive amid declining industry store-level margins. Estimates call for 2-percent global unit growth, but the research firm is modeling 2.5-3 percent through 2021.

Meanwhile, McDonald's investments in technology show management is serious about playing "catch-up," the analyst wrote in the note. For example, the $300-million acquisition of Israel-based Dynamic Yield will offer consumers personalized options on ordering screens. A focus on expanding the relationship with customers should result in a stronger brand and consumer satisfaction.

Price Action

Shares of McDonald's traded higher by 1.1 percent at $205.46 Friday afternoon.

Related Links:

The Street Remains Bullish On McDonald's

10 Biggest Price Target Changes For Friday

Latest Ratings for MCD

DateFirmActionFromTo
Jan 2020MaintainsOverweight
Jan 2020MaintainsOverweight
Jan 2020UpgradesNeutralBuy

View More Analyst Ratings for MCD
View the Latest Analyst Ratings

Posted-In: Bank of America Dynamic Yield Fast FoodAnalyst Color Price Target Restaurants Analyst Ratings General Best of Benzinga

 

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