ARGUS Maintains 'Buy' Rating on McDonald's (MCD), Increases Estimates and Price Target

September 3, 2008 11:00 AM EDT

ARGUS maintains a 'Buy' rating on McDonald's Corp. (NYSE: MCD), Increases estimates and price taret from $68 to $69.

ARGUS analyst says, "The company's Europe and APMEA (Asia-Pacific, Middle East and Africa) divisions continue to show solid sales momentum. In the U.S., MCD's emphasis on such high-growth categories as breakfast, late-night meals and beverages should help to generate solid results despite a weak macroeconomic environment. In addition, McDonald's profitability and free cash flow have improved in recent years, which we expect to result in higher P/E multiples. McDonald's is reducing the number of company-owned restaurants in Europe and elsewhere through refranchising and developmental licensing, which usually results in much higher margins. Reflecting increases to our earnings estimates, we are raising our target price from $68 to $69. We remain bullish on MCD for the long term, as management continues to repurchase shares and increase the dividend."

McDonald’s Corporation primarily franchises and operates McDonald’s restaurants in the food service industry.

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