Declaring that "continued ownership of the business in Russia is no longer tenable, nor is it consistent with McDonald's values," MCD announced this morning that it plans to exit the Russian market and has initiated a process to sell its business in Russia. As this juncture, no terms are available, but MCD is hoping to sell its entire portfolio of restaurants to a local buyer, albeit not as McDonald's restaurants, as it intends to "de-Arch" these properties by removing the McDonald's log and menu, though its does intend to retain its trademarks in Russia. We keep our 2022 EPS estimate of $10.03 and still see EPS of $10.95 in 2023, but these estimates exclude non-cash charges of $1.2B-$1.4B to write off these assets. Despite these charges, we expect MCD to maintain operating margins of around 40% in 2022 and to expend $2.1 billion-$2.3 billion on capital expenditures to add 1300 net new restaurants in 2022. Our 12-month target price of $285 assumes the shares trade at 28.4x our 2022 EPS estimate.
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