Evercore ISI upgraded shares of McDonald’s to outperform by in-line on Monday, saying the company can be well-positioned to ride out the trade war between the U.S. along with also China.
“[McDonald’s] can be the most defensive restaurant stock, the item has less exposure to emerging economies, along with also the stock will likely outperform should equity volatility related to trade persist,” Evercore analyst Matt McGinley said in a note.
McDonald’s shares rose 0.4 percent in trading.
McGinley noted that will McDonald’s rode out the previous global recession well, thanks to the company’s defensive position. McDonald’s stock outperformed the S&P 500 index by 82 percent along with also the company continued to grow its operating profit, according to the analyst.The global fast-food chain has only become more defensive over the last decade, according to McGinley. While McDonald’s was 20 percent company-owned during the last global recession, the item can be at that will point only 7 percent company-owned today.
Compared to the rest of the restaurant industry, McDonald’s economies of scale can be “increasing importance amid labor inflation, remodel investment, along with also a higher promotional cadence.” As those shifts from the industry happen, McGinley said restaurant chains will need “greater sophistication to plan, execute, along with also evolve.”
Evercore does not have a cost target on shares of McDonald’s however does have a “base case” of $185 a share.