UBS: Look For This At McDonald's

In a report published Monday, UBS analyst Keith Siegner argued that McDonald's Corporation (NYSE: MCD)'s restructuring announcement is a "good start" but the timing of progress against financial strategic initiatives was slower than some had happened.

"As we expected, McDonald's financial strategic plan was just a first step and we see material upside over time," Siegner wrote. "With a seeming bias towards franchised models, CEO Steve Easterbrook indicated reaching 90 percent by end of '18 represents a point in time and not the end – we believe further opportunity certainly exists into the future, if not sooner."

Siegner also noted that a greater restraint around costs, plus ownership realignment will make McDonald's $300 million G&A reduction being conservative. In addition, management's reiteration of $2 billion in capital expenditure in 2015 could also be conservative as McDonald's continues to maintain cost discipline.

Siegner said now that McDonald's has outlined initial financial initiatives, investor focus will shift to the company turning around sales as the transformation remains a "show-me story." However, the analyst noted he is "encouraged" that McDonald's can see a turnaround in sales as early as the second half of 2015 due to product innovation that recently focused on high-quality SKUs and national/regional value.

Over the long-term, McDonald's will focus on quality, enhanced service and transforming its perceptions which will improve financial results.

Bottom line, McDonald's restructuring plan will offer several benefits, including an increased focus and shared learnings – similar to benefits seen recently at McDonald's quick-service restaurant peers.

Shares remain Buy rated with an unchanged $110 price target.