Credit Suisse Weighs In On McDonald's Capital Plan, Changes Price Target

Wall Street did not like McDonald’s (NYSE: MCD) capital plan that was released last week; however, Credit Suisse is not as disappointed. The firm raised its price target from $96 to $103 and maintained its neutral rating.

Lead analyst Karen Holthouse writes, “As we expected, MCD capital allocation plan was a disappointment. We did not see room to add more than half a turn of leverage without running into issues with its "A" rating, and the plan to increase cash returns by $1.5-$3.5bil over the next three years can almost be entirely funded by growing cash from operations.”

The McDonald’s announcement also included plans to refranchise many of restaurants, especially outside of the US. Holthouse does not think refranchising is a bad decision, but should not move shares at this point.

Shares of McDonald’s are currently up 0.02 percent to $101.45 in pre-market trading, however there is very little volume.