RBC Capital expects rapid free cash flow growth at McDonald's
RBC Capital analyst David Palmer kept his Outperform rating and $175 price target on McDonald's, saying he still expects the company to produce "rapid" free cash flow growth in the second half of the year thanks to its "solid sales trends" and strong international performance. The analyst believes that comps accelerated through Q2 as its fresh beef product provides a 2bp lift to overall growth. Palmer also expects McDonald's digital and delivery initiatives, along with its more effective marketing and product innovation would accelerate same-store sales. The analyst believes that the recent franchisee-only meeting was organized to address some of the more recent challenges around higher upfront spending because of "rapid pace" of store and menu upgrades and a dramatic reduction in regional advertising by the company.