Are Wall Street Analysts Bullish on McDonald's Stock?

With a market cap of $209.7 billion, McDonald's Corporation (MCD) is a leading global fast-food chain and operates in the quick-service restaurant industry. Based in Chicago, Illinois, it franchises and operates restaurants offering a variety of food and beverages worldwide.

Shares of the fast food giant have underperformed the broader market over the past 52 weeks. MCD has risen 8.2% over this time frame, while the broader S&P 500 Index ($SPX) has gained 30.4%. In 2024, shares of MCD are down 1.3%, compared to SPX’s 23.1% increase on a YTD basis.

Narrowing the focus, MCD has also lagged behind the Consumer Discretionary Select Sector SPDR Fund’s (XLY) 27.2% rise over the past 52 weeks and 19.4% return on a YTD basis.

Despite reporting better-than-expected Q3 adjusted EPS of $3.23 and revenue of $6.9 billion, shares of McDonald’s fell marginally on Oct. 29 due to weaker-than-expected global comparable sales, with a 1.5% overall decline, including a 2.1% drop in the International Operated Markets (IOM) segment. Analysts were concerned that the U.S. performance, though positive, was driven by average check growth rather than increased traffic, indicating less robust demand. Additionally, soft international performance, particularly in the Middle East and China, raised doubts about the company's ability to improve trends in key global markets.

For the current fiscal year, ending in December, analysts expect MCD’s EPS to decline 1.4% year-over-year to $11.77. The company’s earnings surprise history is mixed. It beat the consensus estimates in two of the last four quarters while missing on two other occasions.

Among the 34 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on 18 “Strong Buy” ratings, two “Moderate Buy,” and 14 “Holds.”

This configuration is slightly less bullish than three months ago, with 19 “Strong Buy” ratings on the stock.

On Oct. 31, Bank of America raised McDonald’s price target to $324 and maintained a “Neutral” rating. Despite the increase in the price target, the firm lowered its Q4 and FY25 EPS estimates, citing limited opportunities for positive revisions due to sluggish topline growth in the franchise model.

The mean price target of $323.55 represents a premium of 10.6% to MCD’s current levels. The Street-high price target of $360, implies a potential upside of 23% from the current price.

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On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

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