Goldman Analyst Picks Whoppers Over Big Macs

Goldman Sachs analyst Steven Kron is changing his investment diet from Big Macs to Whoppers, after dropping McDonald's (MCD) from Goldman's Conviction Buy list in favor of Burger King (BKC).

It's not that he's lost his taste for McDonald's. In fact, he continues to rate the stock a "buy" with a $68 price target, based on expectations "for continued global momentum driven by dominant market share in value, breakfast, and snacking.

Instead, Mr. Kron simply feels Burger King serves up more opportunity, at least in the near term, to outperform in the coming months.

In a note to clients the analysts said:

We expect a continuation of current topline momentum with abundant near term sales layers – a strong new product pipeline in new and existing dayparts, pricing opportunity (Burger King is behind peers), and extended summers hours.

These sales layers offer the potential for greater margin upside and upward earnings per share revisions."

Mr. Kron also noted that Burger King's follow-on public offering announced earlier this week should reduce the recent overhang in the stock.

He told clients to expect upside of 17% over the next 12 months based on his C$33 price target. Mr. Kron maintained his "buy" rating.