12:10 PM EDT, 10/15/2024 (MT Newswires) -- McDonald's (MCD) probably posted US gains in Q3 "in a tough backdrop," and evidence suggests "things are moving in the right direction" for the fast-food chain, Morgan Stanley said Tuesday in a report.

The US outlook is improving, helping the stock recover from its Q2 slump, while international markets may still face challenges, leading to mixed results for Q3, Morgan Stanley said. The estimate for US same-store sales was revised to a gain of 0.5% from the forecast for flat data previously with momentum potentially continuing into 2025, the report said.

"Better international visibility might be needed for the next leg higher," Morgan Stanley said.

"Better trends" versus rivals recently, at least in the US, confidence in 2025 plans, a view of "lower end customer relief" next year and the interest rate outlook helped spur a stock rally, and these "remain relevant themes," the report said. Results for Q3 are expected Oct. 29.

Morgan Stanley raised its price target on McDonald's stock to $340 from $296 and maintained its overweight rating.

Shares of McDonald's rose 1.2% in recent Tuesday trading.

Price: 313.68, Change: +3.84, Percent Change: +1.24