MKM On McDonald's: The Future Is Now

McDonald's Corp's MCD ongoing investments in its business has successfully resulted in bringing the future of the business to the market today, according to MKM.

The Analyst

MKM Partners analyst Brett Levy initiated coverage of McDonald's with a Buy rating and $250 price target.

The Thesis

McDonald's continued rollout of its Experience of the Future (EOTF) concept has already resulted in a low-single-digit to mid-single digit percentages sales lift, Levy wrote in the note. The concept is only featured at 60% of all stores, which suggests potential for even more sales growth from unit-level improvements.

The next phase of EOTF roll outs also gives McDonald's management an opportunity to leverage its streamlined operations to better focus on its menu and marketing initiatives, the analyst said. A faster and "more agile" approach to its operations and integrations will prove to be a key advantage for a "stronger company" that targets "winning big" and a willingness to "fail fast."

Levy said 2018 was a busy year for McDonald's and there is no reason to believe management is now ready to "sit back." In fact, the management team looks to be willing to capitalize on recent hard work to better manage the next phase of the company's history.

MKM Partners initiated coverage of a handful of restaurant chains including:

• Wendys Co WEN with a Neutral rating, $20 price rarget.
• Yum! Brands, Inc. YUM with a Neutral rating, $125 price target.
• Shake Shack Inc SHAK with a Neutral rating, $75 price target.

Price Action

Shares of McDonald's were trading higher by 1.2% Tuesday at $219.93.

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