Food & Beverage

McDonald's stock could rise to $120: Strategist

Pro holds McDonald's

Matrix Asset Advisors is increasing its stake in McDonald's on the expectation new CEO Steve Easterbrook's turnaround plan will be successful, the firm's chief investment strategist said on Thursday.

"We think the stock easily could be $110 to $120, and you're getting a 3.5 percent yield while you're waiting," David Katz told "Squawk on the Street."

That outlook is well above consensus. The average price target among analysts is $101.84, according to FactSet data. Shares were trading at $99.46 on Thursday.

McDonald's is under pressure to revive its business after failing to report same-store sales growth since the first quarter of 2014. U.S. comps have been even worse, lingering in negative territory since the third quarter of 2013.

Katz continued to say Easterbrook fixed McDonald's business in Great Britain and Europe, and he brings a greater sense of urgency to the job than his predecessor, Don Thompson.

"The current CEO really is trying to fix things," he said. "He's shaking things up, first with operations, then with the menu, and we think ultimately he's going to do more for shareholders on the financial side with more aggressive share buybacks, converting the company-owned stores to the franchises."

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Earlier this month, Easterbrook laid out plans to increase the number of U.S. locations operated as franchises and reorganize the way the company groups its markets.

By 2018, McDonald's expects franchises to account for 90 percent of all locations, up from 81 percent at the time of the announcement. Restaurants will no longer be grouped geographically, but placed in four categories for accounting purposes: U.S., international lead markets, high-growth markets and foundational markets.

Corvex Management and Jana Partners are among the marquee fund managers that have been buying hundreds of millions of dollars worth of McDonald's in the past quarter, based on recent government filings.

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"We do know there are lot of activists, usually on the smaller side right now that are involved, because they see the type of opportunities we're looking at in the company," Katz said.

McDonald's faced a proxy vote on Thursday at its annual shareholder meeting that would make it easier for big investors to nominate directors to the board. The resolution, which passed, was backed by firms including BlackRock and Vanguard Group.

"We think it would be good for big shareholders to have a bigger say, but think that the board of McDonald's is being very aggressive doing it themselves," Katz said.

—CNBC's Katie Little and Lawrence Lewitinn contributed to this story.