McDonald's stock jumps to account for bulk of the Dow's gain after an upgrade
By Tomi Kilgore, MarketWatch
Longbow research turns bullish, citing signs that U.S. same-store sales will beat expectations
Shares of McDonald's Corp. jumped Thursday after the fast-food giant was upgraded at Longbow Research, which cited signs that recent new Big Mac and chicken tenders offerings could boost sales growth above expectations.
The stock (MCD) closed up $3.44, or 2.2%, enough to be the leading gainer among Dow Jones Industrial Average components. The price advance added about 24 points to the Dow, which closed up about 40 points.
Longbow analyst Alton Stump raised his rating to buy from neutral, and set a price target at $183, which was 16% above current levels.
Based on conversations with U.S. franchisees, Stump said he believes third-quarter same-store sales were up 4% to 4.5% from the same period a year ago, which is above the FactSet consensus for growth of 3.4%.
McDonald's isn't scheduled to report third-quarter results until Oct. 24.
Stump said his contacts indicated that the new Sriracha Big Mac introduced in July has sold "surprisingly well to date," and was the second-biggest seller among the company's "Signature Crafted" lineup during the quarter.