McDonald's Stock Is Up analyst sees room for more gains

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McDonalds

(MCD) edged higher on Friday, helped by a bullish note of Telsey Advisory Groupoptimistic about the quarter's performance and the company's long-term prospects.

The story back. McDonald's has grown 7.3% since the beginning of the year and has increased more than 18% in the last 12 months. While many other stocks stumbled in 2018, McDonald's held up well as investors scrambled for safety.

Still, the stock was more than a port during a storm. McDonald's has increased its dividend and its results have been robust, and analysts have applauded the results of the company's restaurant renovation campaign, Experience of the Future. This optimism has continued this year. Its strategy, including its investment in artificial intelligence, is generating a lot of enthusiasm as business momentum continues.

What's up. Telsey Bob Derrington reiterated on Friday McDonald's Outperform rating, raising its price target to $ 210 from $ 195, about 10% higher than the current share price. Derrington is more optimistic about McDonald's menu enhancements, marketing, the company's use of the technology, and the relationship with franchise owners for its restaurants.

He believes that while a severe winter may have hurt demand in some locations, overall first-quarter comparable store sales "have remained relatively strong, thanks to the addition of new products, more efficient promotions, and better pricing. more effective regional marketing. [a] menu / higher price. "

Look to the front. Derrington has raised earnings per share expectations in 2019 and 2020. Although exchange rates remain a headwind, McDonald's is one of its top picks. The shares "offer both offensive and defensive investment attributes, his system seeming well prepared for both good times and potentially slower periods," wrote Derrington.

He applauded management's constant efforts to innovate and create consumer comfort, highlighting its combination of attractive higher-priced items and lower-value offers, as well as its marketing influence and vast reach.

Equities also come with a plump yield of 2.4%.

Although McDonald's lagged the overall market this year, stocks still performed relatively well, as the 2019 rally helped riskier stocks.

Investors have been waiting for years for McDonald's to commit to restructuring its restaurants. Now that the program seems to be coming to an end, newly revitalized outlets should reap the benefits of higher traffic and sales that the restructuring effort has spawned elsewhere.

Fewer renovations will save money, even though labor costs will remain a source of pressure. The lowest wages on the pay scale are on the rise, but McDonald's deep pockets allow him to endure the shock better than most others. As consumers remain focused on value, the channel is well positioned to stay relevant.

McDonald's is up 0.3% to $ 190.44 recently.

Write to Teresa Rivas at [email protected]