December 19, 2017 / 12:34 PM / a year ago

BUZZ-McDonald's value menu could turn 2018 into a year of deep discounting in fast food space - CS

** McDonald’s fourth quarter so far points to continued same-store sales growth, Credit Suisse analyst Jason West says

** With next month’s launch of new value menu, featuring items at $1-$3, and other initiatives including fresh beef, current estimates of ~3 pct growth in 2018 U.S. same-store sales could prove conservative - West

** West, rated 5/5 stars by TR StarMine for recommendation accuracy on MCD, raises stock PT by $7 to $185; maintains “outperform” rating

** MCD’s launch of new value menu on Jan. 4 in U.S. will make 2018 a potential year for intensive discounting in fast food space - West

** Wendy’s, Jack in the Box and Sonic most exposed to MCD’s value push considering earnings sensitivity to U.S. market, product/customer overlap, West says

** Dunkin’ Brands and Starbucks also face risk as MCD has effectively made its beverage value strategy permanent as part of new value menu, he adds

** But notes, Restaurant Brands and Yum Brands have the lowest sensitivity to U.S. same-store sales trends (Reporting by Amy Caren Daniel in Bengaluru)

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