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Banc of America upgraded McDonald's (MCD
) to buy from market perform.
Analyst Andrew Barish says the fast-food chain surprisingly and dramatically reduced its 2003 planned new restaurant openings to roughly half of the 2002 levels. Barish notes resources will be allocated to efforts to drive same-store sales, increase cash flow and improve margins and returns. Barish says the plan will reduce cannibalization, and put less operating pressure on the system. He cautions that fundamentals may not "turn on a dime" given McDonald's size, however, he thinks the restructuring efforts will be rewarded in the market. Barish sees $1.43 2002 earnings per share and $1.53 for 2003. He has a $25 target.