McDonald's Offers The Most Visible Top-Line Growth Story In Fast Food, Analyst Says

McDonald's Corp MCD offers investors one of the most visible top-line growth stories in the global fast-food category, according to Wedbush.

The McDonald's Analyst: Nick Setyan initiated coverage of McDonald's stock with an Outperform rating and $240 price target.

The McDonald's Thesis: McDonald's boasts industry-leading technology, a compelling marketing strategy and is making all the right investments in its business, Setyan wrote in the note. Near-term initiatives include a new crispy chicken sandwich and the return of spicy nuggets in the first half of 2020. Next year will see the launch of the plant-based McPlant platform along with quality improvements across the existing menu-line.

Aside from in-store and menu improvements, McDonald's continues to heavily invest in the digital side of its business. More than 60 million people registered on the McDonald's app and another 20 million downloaded the app.

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Setyan says the company can leverage its large base through loyalty programs that could contribute 120 basis points to 480 basis points same-store sales growth on an annual basis as early as the back half of 2021.

As the current round of investments in store remodels and other menu additions wane, the company should show free cash flow per share growth in 2022, followed by double-digit earnings per share growth in 2023.

MCD Price Action: Shares of McDonald's were trading flat Tuesday morning at $210.25.