First Union upgrades shares of McDonald's Corp. (MCD) to strong buy from buy.
Analyst Jeff Omohundro says given that shares currently are trading at about 16.5 times his $1.53 2001 EPS estimate, he thinks concerns over the recent soft sales trends in Europe and the unfavorable currency exchange may be more-than-fully reflected in the price.
He believes the company's efforts to improve sales results in Europe and the U.S. could help to drive EPS growth, and sees significant share-price appreciation in upcoming quarters. Omohundro cites the company's focus in the U.S. on food quality and variety with its "New Tastes" menu.
He sees $1.75 2002 EPS, and has a $39 12-18-month price target.