Less than a week after announcing plans to exit the Russian market, MCD announced plans to sell its portfolio of Russian restaurants to its existing licensee, who will operate the restaurants under a new (non-Mcdonald's) brand. MCD expects the transaction to close in several weeks, subject to regulatory approval. We applaud the swiftness with which MCD acted in this regard, though we note our 2022 EPS estimate of $10.03 a share excludes an estimated $1.2 billion to $1.4 billion in non-cash write-downs we expect MCD to incur as a result of its Russian exit. We see 2022 as a transitional year for MCD, and expect the chain to expend between $2.1. billion and $2.3 billion on capita expenditure in 2022, adding 1,300 new restaurants. Our 12-month target price of $285 assumes the shares (which currently yield 2.4%) trade at 28.4x our 2022 EPS estimate, a premium to the peer average of 27.5x, supported by MCD's above-peer margins.
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