Seeking some sustenance from the fast-food sector?
Credit Suisse analyst Keith Siegner this morning advises that you should steer towards the Golden Arches, and away from their chief rival.
- Siegner today upped his rating on McDonald’s (MCD) to Outperform from Neutral, lifting his price target to $71, from $69. The analyst writes that he sees “several potential drivers of estimate increases,” particularly from international operations. He lifts his 2010 EPS estimate by a penny to $4.47; for 2011, he moves up two pennies to $4.88. He contends that current Street estimates do not fairly reflect the company’s ability to build on recent share gains; he thinks the company will benefit in a slow economic recovery from an ability to appeal to both “depressed” and “recovering” consumers. MCD reports Q4 results on Friday morning.
- On the other hand, Siegner cut his rating on Burger King (BKC) to Neutral from Outperform, cutting his target to $21, from $23. “We believe the $1 double cheeseburger has raised near-term expectations and maintaining momentum will be difficult,” he writes. (Double cheeseburgers, I would add, lead to weight gain, which might lead to increased inertia, but wouldn’t that also increase momentum, given that momentum=mass X acceleration? Kind of like a 300-pound defensive lineman?) Anyway, Seigner says that BKC offers “compelling value, but will require some patience.” He writes that challenging industry conditions and increasing tension with franchisees will push out the realization of recent restructuring moves to 2011 and 2012.
In today’s trading:
- MCD is up $1.48, or 2.4%, to $63.76
- BKC is down 58 cents, or 3.1%, to $17.91.
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