Cowen Says Buy McDonald's (MCD) Ahead of Q3 Earnings

Cowen & Co. is out with a research note this morning suggesting that investors buy shares of McDonald's (NYSE: MCD) ahead of the company's Q3 earnings release, which is expected out on Wednesday, October 22. The firm maintains its Outperform rating.

The firm cites recent channel checks suggesting that McDonald's US comps remain strong in September and Cowen believes that the company is "overly caught-up in the global consumer slowdown trade". The firm calls McDonald's "relatively recession-resistant" given:

• remodel investments in existing stores since 2003's Plan-to-Win (80% Germany; 40% USA; 20%/yr UK)
  
• convenience/value platform w/high 60%-70% AM/lunch mix, and
  
• added permanent sales layers like extended hours, high/low and 4th-tier product news, beverages (550 McCafe's in Germany/US Bev platform)

Cowen raised its September US same store sales guidance from +2.5% to +3.5% and said it is confident with its Europe/APMEA September comps of +5. The firm raised its Q3 EPS estimate from $0.95 to $0.98, versus the consensus of $0.97. The firm also adjusted its FY08 and FY09 EPS estimates from $3.53 and $3.82 to $3.54 and $3.80, respectively. The Street is currently estimate McDonald's will report EPS of $3.54 in FY08 and $3.82 in FY09.

McDonald's Corporation, together with its subsidiaries, franchises and operates McDonald's restaurants worldwide.

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