The Ratings Game: McDonald’s sales set to supersize thanks to stimulus checks and new chicken sandwich, analysts say


McDonald’s Corp.

is having a good first quarter, according to U.S. franchisees polled by UBS.

“Our latest U.S. franchisee checks highlight continued sales momentum first-quarter to-date, and optimism for a still-solid second half against difficult compares,” wrote analysts led by Dennis Geiger.

Franchisees cite strong drive-through and delivery business, and the new chicken sandwich among the drivers.

McDonald’s new chicken sandwich launched a few weeks ago, and analysts anticipated it would yield positive business results.

“While checks vary, our sense is the chicken sandwich is driving a low-single-digit comp contribution, at least meeting, if not exceeding, expectations,” the analyst note said.

“We anticipate an outsized marketing push over the coming weeks. We believe the new sandwich further elevates brand-quality perceptions, putting McDonald’s in the premium chicken sandwich game, with more chicken platform innovation coming.”

Stimulus checks, which are hitting taxpayers’ bank accounts now, should also help the burger giant.

See: Starbucks expected to get jolt from stimulus checks and restaurant reopenings

“Stimulus-check benefits and easy compares should support outsized sales over the coming weeks/months, while expectations for remainder-of-year product/marketing calendar are positive,” UBS said.

Analysts think McDonald’s is headed for growth in the long term thanks to its investments in marketing, digital, drive-through, menu improvements and other areas of the business.

UBS rates McDonald’s stock buy with a $240 price target.

“Reopened lobbies and stronger breakfast and late-night sales should be additional tailwinds for the brand later in the year,” UBS wrote.

McDonald’s was upgraded to buy from hold at Deutsche Bank, with analysts there also citing the U.S. business.

Both research groups are upbeat about international potential as well.

Also: Avocado seller Mission Produce stock skyrockets as company heads into the mango business

Stifel analysts say stimulus checks, improving employment numbers and pent-up demand are among the factors that will impact restaurants, particularly “reopening” stocks. Stifel’s favorites are Chipotle Mexican Grill Inc.
Wingstop Inc.

and Papa John’s International Inc.

“Stifel recently conducted a consumer survey that indicated consumers continue to have a strong desire for dining out,” analysts wrote in the March 14 report.

McDonald’s stock gained 2.3% on Wednesday and has rallied 52.2% over the past year, nearly matching the Dow Jones Industrial Average
which is up 55.5% for the period.

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