September 28, 2017 / 3:13 PM / a year ago

BUZZ-McDonald's: Longbow upgrades, says Q3 comp sales ahead of consensus

** McDonald’s shares up 2.2 pct, giving biggest boost to Dow, after Longbow Research upgrades to “buy”

** Shares of the world’s biggest restaurant chain set for best once-day pct gain in 2 months and now up ~29 pct YTD

** Based on talks with MCD US franchisees, Longbow says MCD’s Q3 comp sales are up 4.0-4.5 pct, ahead of brokerage’s prior estimate of 3.5 pct and market estimate of 3.4 pct

** Brokerage says MCD continues to gain from beverage value promotions as well as introduction of Sriracha Big Mac in late July and Signature Crafted sandwiches

** MCD likely gained share in Q3 over Dunkin Brands (rated “underperform”) and, to a lesser extent, Restaurant Brands-owned Burger King (“neutral”), brokerage says

** Given positive Q3 trends and ongoing turnaround story, MCD deserve to trade above historical multiples, Longbow says

** Based on 16.5x 2018E EV/EBITDA, sets 12-month PT of $183, which is 2nd highest among 32 covering brokerages

** Now 23 brokerages rate MCD “buy” or higher, up from 14 in Jan and from 13 in last Oct, as per TR data; median PT $174

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