The power of McDonald's McRib might shock Wall Street in January

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Oh, the craveable mighty McRib.

For those not tracking their health on Apple devices, the nationwide return of McDonald’s McRib on Dec. 2 has been one delicious 520-calorie weekly (or daily) belly bomb judging by rather favorable social media posts. Wall Street analysts would be wise to factor such McRib consumer excitement into their earnings models before Mickey D’s fourth quarter earnings release on Jan. 28. Or they may run the risk of missing out on potential earnings upside, upbeat guidance and stock price gains, hints one veteran restaurant analyst.

“I do think that McDonald’s has done a nice job of driving sales with the McRib with better marketing,” said UBS restaurant analyst Dennis Geiger on Yahoo Finance Live. “There will be a good catalyst path into at least the first part of 2021. So from a sales perspective, there will be good numbers that you will see from them.”

Geiger is fresh off upgrading his rating on McDonald’s (MCD) shares to Buy from Neutral this month. He sees the stock’s fair value at $240 a share. McDonald’s shares traded at $212 a share Wednesday afternoon, up 7.7% year-to-date.

Besides the sales driver that is the McRib, Geiger is bullish on the financial impact from renewed product innovation out of McDonald’s in 2021.

TO GO WITH AFP STORY US-FOOD-SOCIETY-MCDONALD'S A photo of a McDonalds' McRib sandwich, November 2, 2010. Fast food giant McDonald's is bringing back a sandwich -- the McRib -- that gained cult acclaim over the last three decades, in a move lauded by fans known to travel great distances in the hunt for the coveted treat.The boneless pork chop between a bun and slathered with tangy BBQ sauce, topped with onions and pickles, was first launched in 1981, and with rare exceptions has only been offered for sale in select McDonald's for a few weeks at a time. From Tuesday, it will be available nationwide, and for an entire month. AFP Photo/Paul J. Richards (Photo credit should read PAUL J. RICHARDS/AFP/Getty Images)
Fast food giant McDonald's brought back the McRib, which gained cult acclaim over the last three decades. AFP Photo/Paul J. Richards (Photo credit should read PAUL J. RICHARDS/AFP/Getty Images)

Geiger believes the upcoming launches of the McPlant and revamped chicken sandwiches, as well as meal collaborations with Travis Scott and J Balvin, will be sales movers. The company’s important breakfast business should also return to some form of normalcy as people travel to work again, post getting the COVID-19 vaccine, Geiger notes.

To be sure, McDonald’s has some proving to do to the Street that bulls like Geiger are on the mark with their optimistic calls.

McDonald’s shares have dropped 2.8% over the past three months, badly lagging the Dow’s 10.5% gain, as the toll from the pandemic continues to weigh heavily on all restaurant chains. That toll includes virtually non-existent indoor dining sales as states impose new mobility restrictions. The other toll reflects pressured price-to-earnings multiples for the restaurant space in light of the ongoing pandemic.

But hey, maybe the allure of the McRib will help McDonald’s overcome such awful external forces. Jan. 28 will be a proving day for the world’s largest burger flipper.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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