Tags: US | McDonalds | Analyst | Note

Analyst: McDonald's Stays Strong in Weak Economy

Wednesday, 03 Feb 2010 11:26 AM

McDonald's "no frills" and low prices continue to resonate with cash-strapped consumers, driving strong results in 2010, a Goldman Sachs analyst said Wednesday.

Goldman Sachs analyst Steven T. Kron said in a note to investors that as consumers continue to cut back because of lingering worries over jobs and the economy, McDonald's and its low prices offers a "scarce" combination of higher margins and positive sales in stores open in at least one year.

Sales at stores open at least a year are a key measure of retailer performance because they measure growth at existing stores rather than from newly opened ones.

Kron said he expects a new dollar breakfast menu launched in January and a shift in advertising emphasizing value will help U.S. sales in stores over the next few weeks.

He put McDonald's on its "Conviction Buy" list and raised his price target by $2 to $75.

Shares of the Oak Brook, Ill., company rose $1.62, or 2.5 percent, to $65.65 and earlier traded at a 52-week high of $65.75. The stock has traded between $50.44 and $64.78 during the past 52 weeks.

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