McDonald's is top restaurant pick at Instinet on fresh beef, Dollar Menu, Subway troubles

McDonald's Corp. is Instinet analysts' top U.S. restaurant pick for 2018 based on the rollout of fresh beef; the new Dollar Menu with $1, $2 and $3 price points that will go national this month; problems at Subway, the third-largest restaurant chain; and a possible stock split. The fresh beef rollout should be complete by the middle of this year, which Instinet analysts led by Mark Kalinowski think will boost same-store sales. The new Dollar Menu will also give same-store sales a bump. In December, The New York Post reported that traffic to Subway sandwich shops has dropped 25% over the past five years, providing McDonald's with an opportunity to snap up market share. "We believe hundreds of Subway franchisees are in financial distress, and we would not be surprised to see a net-closure count in the hundreds once again for Subway U.S. during 2018 (from current domestic store count of 25,800+)," the analyst note said. Instinet rates McDonald's shares buy and raised its price target to $190 from $180. McDonald's shares are up 42.5% for the past year, outpacing the S&P 500 Index , which is up 20.2% for the period, and the Dow Jones Industrial Average , which is up 25.1% for the last 12 months.

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