Justin Sullivan/Getty Images
Another McDonald’s bull is weighing in on the fast-food giant ahead of its first-quarter results later this month, saying a recent “sales frenzy” bodes well for restaurant earnings this season.
Cowen & Co. analyst
Andrew Charles
reiterated an Outperform rating on McDonald’s (MCD), while raising his price target to $255 from $250. The company will report earnings on April 29.
Industrywide data from the restaurant analytics firm MillerPulse showed that sales in January were the best in more than a year. Sales slipped in February, but they appear to have soared more than 35% in March.
This “sales euphoria over the most recent four weeks was echoed throughout our checks,” Charles said. Consumers are not only using their stimulus checks to dine out, but are feeling safer in public, given that nearly 23% of the country is now fully vaccinated against Covid-19, he wrote.
Charles’ own data showed that the strength in March has either “held or improved” through April, “suggesting there’s something deeper beyond stimulus aiding restaurant sales.” He said he believes that companies are benefiting from the closure of independent competition, as well as demand from consumers eager to get out of the house.
The picture looks bright for McDonald’s specifically, he said, because the recently launched Crispy Chicken Sandwich rivals McNuggets for the most successful product debut in recent history. He raised his estimate for first-quarter growth in same-store sales to 13.5%, a high on the Street, from 11%.
He is one of several analysts that have lifted their price targets on McDonald’s recently.
Charles also raised his call for Domino’s Pizza (DPZ) stock price to $440 from $400 and his Yum! Brands (YUM) target to $112 from $105, while maintaining an Outperform and Market Perform ratings, respectively on the shares. His preferred stocks going into earnings season are McDonald’s,
(CMG) and
(SBUX).
McDonald’s was down 0.3% to $229.89 in early trading. The shares are up 7.3% year to date and have risen 28.3% in the past year.
Write to Teresa Rivas at teresa.rivas@barrons.com
