Tae Kim

CNBC

McDonald's new burgers are a big sales hit with consumers, according to one small Wall Street firm which lit a fire under the stock on Thursday.

Longbow Research raised its rating for the restaurant chain to buy from neutral, predicting McDonald's will report sales above Wall Street expectations.

"Given our latest positive checks and favorable short and long-term view of MCD's fundamentals, we are upgrading the shares this morning," analyst Alton Stump wrote in a note to clients Thursday. "Beyond positive trends for the current quarter, we believe the shares of MCD deserve to trade above the company's own historical multiples in light of its ongoing turnaround story both in the U.S. and internationally."

McDonald's shares rose 2.5% midday Thursday following the report. The stock is up 27% year-to-date through Wednesday versus the S&P 500's 12% gain.

Stump started his price target for McDonald's shares at $183, representing 19% upside from Wednesday's close.

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The analyst cited numerous recent conversations with McDonald's U.S. franchise restaurant owners, which revealed the Sriracha Big Mac, other Signature Crafted sandwiches and beverage promotions are boosting sales results.

As a result, Stump increased his McDonald's third-quarter comparable sales growth estimate to a range of 4% to 4.5% from 3.5% versus the Wall Street consensus of 3.4%.

"MCD's ongoing shift to a less capital intensive, higher franchised model should generate a more predictable earnings stream and accelerated free cash flow that warrant a higher multiple for the shares," he wrote.

Famed short-seller Jim Chanos told CNBC PRO earlier this month he is betting against other burger chain stocks because of McDonald's recent resurgence.

— CNBC's Michael Bloom contributed to this story.

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