CIBC World Is Cautious on McDonald's

Analyst John Glass doesn't think the Street has factored in the impact of strategy changes to domestic store margins

CIBC World is cautious on McDonald's (MCD ).

Analyst John Glass says McDonald's management may guide down the Street's estimates by 5% during a Sept. 17 conference call. He thinks recently announced strategy changes are likely to face capital constraints as McDonald's invests up to $1 billion to upgrade its domestic store base.

Glass says the company's need to pare back its share repurchase program and/or new store openings may result in reduced earnings per share growth. He says shares could see downside to $18-$19, based on historical trough valuations. Glass sees $1.49 2002 earnings per share and $1.63 for 2003. He rates the restaurant sector as underperform.

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