Credit Suisse Analysts Bullish On McDonald's

Ever since the fast food giant has posted better than expected results, analysts have reiterated "outperform" rating for the stock

Analysts from Credit Suisse Group, Jordy Winslow and Jason West have given the “outperform” rating to McDonald’s Corporation, according to the recent note issued to the investors. The price target set by analysts is massive $135.

Analysts have purported that there are two chief points that are deduced out of the company’s earning calls. They proposed that the management of the Golden Arches has now come out of its initial recovery phase and therefore short-term updates need not be necessary. This, according to analysts, indicates that the increase in the same store sales will not be restricted domestically but the gained momentum will be observed globally as well. But, the fast food giant will lose the benefit of the Leap Day on the basis of which, analysts have projected the company’s same store sales, globally, of 3.7% and the same store sales in the U.S. of 3.5%, which is respective 6.2% and 5.4% lower than the company’s sales during the first quarter.

The management has emphasized that their strategy for turnaround has finally kicked in. Therefore, sometime later, the company will plan a stronger longer-term strategic update. CEO Steve Easterbrook, during the conference call, proposed that through the ongoing investments made in the labor and technology, the organization would be able to reach the 2-year same-store sales acceleration. Analysts also endorsed Mr. Easterbrook’s vision and believe that the company has potential of posting 2% global same-store sales in second half of 2016.

Analysts have also taken up their EPS projections to $5.57/$6.32 to $5.45/$6.17 because of few foreign exchange improvements and the better-than-expected results of the company in the first quarter. Analysts have estimated that from 2015 to 2017, the EPS will undergo growth of 27% chiefly due to the reductions in General and Administrative Expenses and buybacks.

Last week, the Oak Brook, Illinois based company posted its first quarter earnings and the organization outperformed analysts estimations and posted magnificent results. After the earnings report, the fast food giant’s stock went up by 2%. Since the last year, the stock has gained over 32.5%.

The largest fast food chain managed a 46% increase in its EPS. On revenue of $5.09 billion, the company earned EPS of $1.23. While analysts had predicted the company will earn revenue of $5.81 billion and an EPS of $1.16.

Similarly, the same stores sales have gone up 6.2% surpassing the Street expectation of growth of 4.5%. The company has reported that domestically, its McPick 2 scheme and all day breakfast have increased the same-store sales by 5.4%

At the market close on Monday, McDonald’s Corporation stock stood at a price of $127.5.