McDonald's Corporation Skips Higher After Scoring an 'Outperform' Rating

Brokerage firm Robert W. Baird & Co. is refusing to take a side in the burger wars. Analyst David Tarantino today started coverage of McDonald's Corporation (MCD) and Burger King Holdings (BKC), and he slapped upbeat "outperform" ratings on both securities.

"We are confident McDonald's can capitalize on a globally recognizable brand, excellent value proposition, and powerful operating platform to deliver healthy near- and long-term results," wrote Tarantino in a note to clients. As a point of caution, he also warned that "we think near-term trends could be volatile, due to a variety of factors pressuring consumer spending."

The analyst set a price target of $61 for MCD, representing a premium of about 25% to Thursday's close. The fast-food titan's average 12-month price target is $65.21, according to Thomson Reuters.

However, the majority of brokerage firms are slightly skeptical of the stock's prospects. Zacks reports 8 "hold" ratings, compared to 6 "buy" or better recommendations. This wary sentiment also extends to the options pits; MCD boasts an inflated Schaeffer's put/call open interest ratio (SOIR) of 1.32, just 6 percentage points from an annual pessimistic peak.

While the equity's momentum has slowed somewhat in the face of daunting economic headwinds, the bears could be shaken loose as Mickey D's extends its long-term uptrend. The shares recently bounced off support from their 40-month moving average. A continued show of strength from the stock could prompt more bullish notes from brokers and help to propel MCD higher.

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