Shares of fast-food giant McDonald's (NYSE:MCD) could hit $230 within 12 months, according to one analyst. J.P. Morgan analyst John Ivankoe reiterated a $230 12-month price target for the stock on Tuesday, citing strategic investments in technology and a possible launch of a loyalty program as key catalysts for the stock over the long term.

In the near term, though, the analyst thinks McDonald's could miss the consensus estimate for same-store sales growth in its third quarter. But even with this short-term speed bump on the horizon, Ivankoe thinks shares are worth buying.

McDonald's drive-through in Denton, Texas

Image source: McDonald's.

Strong momentum

McDonald's business certainly seems to have the wind at its back. In the consumer goods company's most recent quarter, its global comparable sales increased 6.5%. Of course, Ivankoe now expects this growth to come down to 5% in Q3, citing potential heightened competition from a growing list of restaurants participating in Uber's (NYSE:UBER) Uber Eats delivery network. But as Ivankoe noted in his note to clients this week, the company still possesses "solid underlying fundamentals." To this end, even 5% growth in comparable sales is notable.

Further capturing the company's strong underlying business, McDonald's systemwide sales increased 8% year over year in Q2 when measured in constant currency. Total revenue was up 3% in constant currency, but was negatively impacted by the company's refranchising efforts.

Showing how McDonald's investments in technology are paying off, the company's digital drive-through menu boards are increasing average checks, thanks to their ability to offer suggestions based on the time of day, the weather, and customer orders. This drive-through technology is working well -- so well that McDonald's CEO Steve Easterbrook said on the company's second-quarter earnings call that he wanted to increase the number of U.S.-based drive-throughs using it from 700 to more than 8,000 in just two weeks.

"Digital capabilities change by the day and impact what customers ultimately expect from us," explained Easterbrook on the earnings call. "The technological ecosystem we're building will enable us to meet these rising expectations, positioning us for new opportunities to elevate and transform the customer experience."

Valuing McDonald's stock

While McDonald's is undoubtedly seeing impressive strength in its business as its investments in technology pay off, shares are not cheap. The fast-food stock trades at 27 times earnings and 30 times free cash flow.

Of course, market leaders deserve to trade at a premium. Furthermore, the company's dividend helps support this robust valuation. Last month, McDonald's boosted its dividend by 8%, giving the company a meaningful dividend yield of 2.4%.

But to continue justifying such a steep valuation, McDonald's will have to accelerate revenue and earnings growth.

A price of $230 for McDonald's stock within 12 months may be possible, but investors shouldn't count on it. Instead, they may want to wait and see if shares can fall further before buying. At this level, an exciting future seems to already be priced into McDonald's stock.