The analyst said Tuesday that McDonald's "core U.S. business is accelerating and set to show upside to consensus estimates" for the first quarter and full-year 2019.
His thesis changed based on management's decision to move some of its marketing power to local co-ops, improvements at breakfast [lapping the dollar menu hurt breakfast] ... and likely increased menu innovation.
"Of note, consensus models a deceleration in 2-year trends throughout 2019, which we believe provides room for positive surprises," Slabaugh said.
"Last quarter's U.S. result was in-line with expectations, and the int'l markets fared better than expected; however, the initially positive guidance for high-single-digit EPS growth was overshadowed by the Company talking down 2019 expectations on rising D&A expense (due to accelerating EOTF) and lower "other income" that has helped pad the P&L in recent years. After re-examining our model, we believe we appropriately adjust for such headwinds to the point of conservatism if comp growth is as strong as we suspect," he wrote.
There are 25 buys, eight holds and no sells on the stock, according to Bloomberg.