RBC Capital analyst David Palmer reiterated an Outperform rating and raised estimate and his price target on McDonald's (NYSE: MCD) to $120.00 (from $110.00) following solid results yesterday.

"We are raising our price target and EPS estimates as we believe our thesis appears to be playing out as expected," Palmer said. "While All-Day Breakfast and value initiatives appear to be the catalysts needed to jump-start McDonald's US trends, we suspect brand upgrades are coming in 2016 that could build upon the chain's momentum."

The firm is raising 4Q EPS estimate from $1.19 to $1.20 (+6% YOY) based on our higher global SSS growth estimate of 3.3% (1.5% prior).

The firm sees international lead markets as a blueprint for the US: "For some time, we have been intrigued by McDonald's performance in International Lead markets such as the UK, Australia, and Canada, as these markets have proven to be among the most consistently growing in the McDonald's system. While All-Day Breakfast and value initiatives appear to be the catalysts needed to jump-start McDonald's US momentum, we believe the domestic market can find inspiration from an elevation of the brand in these developed markets. We suspect brand upgrades are coming in the US in 2016 and beyond in the form of: 1) digital engagement; 2) restaurant assets; 3) menu ingredients; and 4) customization. These initiatives may build upon the momentum of All-Day Breakfast and new value messages to drive long-term share."

Also, McDonald's may be re-framing the debate on China. "In our view, McDonald's staggering 26.8% SSS growth (vs. -22.6 last year) in China may be an indication that the fast food industry in China is not broken amid the slowing economy. Moreover, we believe McDonald's results likely reaffirm that Yum China's results are less about the Chinese fast food industry and more about Yum Brands' full service brand, Pizza Hut China."

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Shares of McDonald's closed at $110.87 yesterday.