By Thomas Hughes
Blue Chip McDonald’s Still Winning the Burger Wars
After checking the latest happenings in the burger world two things have become clear. The burger—in particular the QSR burger—and the industry are doing just fine, and within that McDonald’s stands out as the clear winner. The company does not have the most robust growth outlook, but it is the largest competitor by a fair margin so the law of large numbers does apply. The pace of growth may be slowing, but McDonald’s projected $1.45 billion in YOY revenue growth is more than some of the others make all year and at least half of revenue for the rest. Along with that comes a relatively stable supply chain, a strong balance sheet, and a healthy dividend.McDonald’s Is Getting Upgrades at the Expense of Peers
McDonald’s received two notable upgrades this week while its peers continue to get downgraded and have their price targets reduced. Its upgrades come from BTIG Research and Barclay’s, which maintained their Overweight and Buy ratings but raised their price targets to a consensus of $297.50. This compares to the Marketbeat.com consensus of $269 and implies about 12 percent of upside for the stock. These are the first analyst actions since the last earnings report when 11 of the 30 analysts covering the stock raised their price targets in a single day.Restaurant Brands International, the owner of Burger King and Popeye’s Louisiana Kitchen, is also rated a Buy but a weak Buy with a notable difference of trend within the analysts. Barclay’s maintained its overweight rating on this stock as well but lowered the price target to $72 from $74 and more in line with the Marketbeat.com consensus estimate. The consensus estimate assumes about 24 percent of upside for the stock, but the only analyst’s activity over the past two months—and there has been a fair amount—has been price target decreases, and this trend is seen in other names as well.
