- Atlantic Equities analyst Edward Lewis upgraded McDonald's Corp (NYSE:MCD) from Neutral to Overweight and raised the price target from $245 to $278.
- Lewis noted that the quick-service restaurant proves resilient during periods of economic weakness.
- He saw MCD delivering resilient system growth as, with the renovation of the US store base now essentially complete, the priority for Capex will become opening new units in the International Operated Markets division.
- In this division, he saw ample opportunity for continued unit growth and market share gains.
- In addition, he saw scope for ongoing margin expansion as the franchised store base rises, accelerated by the exit from Russia, de-risking operational performance.
- He saw digital as a positive driver across all aspects of the business from driving strong engagement, delivery, and the potential to transform loyalty, enabling MCD to not only better understand its customers and tailor promotions accordingly but also to improve store operating costs through increased use of automation and better planning around labor.
- He noted that McDonald's operates a resilient business and has a wealth of experience managing through such challenging periods.
- The positive changes McDonald's has been undertaking as it becomes a franchise business essentially are "adding to the company's appeal," Lewis added.
- He concluded that these attributes of resilient growth with improving returns merits MCD shares sustaining a premium valuation.
- Price Action: MCD shares traded higher by 1.71% by $246.99 on the last check Wednesday.
- Photo via Wikimedia Commons
