Analyst Likes What's Cooking at McDonald's - TheStreet

Analyst Likes What's Cooking at McDonald's

Bear Stearns raises its rating on the hamburger chain and sees a number of positives.
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A Bear Stearns analyst has increasing confidence in

McDonald's

(MCD) - Get Report

and upgraded the restaurant chain's shares Friday to outperform from peer perform.

The company's strict capital spending program has improved free cash flow, while a likely dividend increase and a new national advertising campaign are all recent positives for McDonald's, said analyst Joseph Buckley. He has a year-end 2004 price target range of $26 to $27 on McDonald's.

Buckley is also considerably more optimstic on the company's earnings than many on Wall Street. He predicts a profit of $1.40 a share in 2003, while the consensus is $1.33, and he expects $1.50 a share in 2004, but the consensus is only $1.40.

"Our confidence in our numbers is higher than earlier in the year based on improved trends and management tactics," Buckley said, but he added that there's "little visibility on sales beyond the summer months."

Buckley said he received a report from an independent source that July U.S. sales are up 7.7%, which should reassure investors. Additionally, the analyst said, international trends have stayed soft, but "the stock affords an opportunity to buy depressed international earnings at an attractive multiple."

Recently, shares of McDonalds were up 3.5% at $21.21 on the

New York Stock Exchange

.