Zacks Investment Research upgraded shares of McDonalds Corp. (MCD) from UNDERPERFORM to NEUTRAL on September 27, 2012, with a target price of $98.00.
McDonald's is posed with the macroeconomic headwinds especially in Europe, decelerating growth in Asia, intense competition in the U.S. as well as unfavorable currency translation. Company specific headwinds such as increased SG&A expenses coupled with rising tax rates also remain concerns for the company. However, in such a backdrop, we remain optimistic about the company's persistent efforts to emerge out of this tough time. Some of the company's value-driven initiatives seem to pay off, as evident from its accelerating same store sales growth in August. Also, McDonald's has historically enjoyed increased global comps and moderate growth prospects with its exposure to faster-growing international markets, a strong balance sheet and consistent earnings. Near-term commodity inflation outlook looks favorable too. Hence, we upgrade the recommendation from Underperform to Neutral.
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