On Friday, BTIG maintained a Neutral rating on shares of McDonald's Corporation (NYSE:MCD), following a series of franchise checks that suggest an improving sales trend for the fast-food giant.
The checks indicated that comparable sales (comps) may turn positive for the third quarter, contrasting with the consensus estimate of a 0.5% decline. BTIG now expects a 0.5% increase in U.S. comps for the period.
The research by BTIG highlighted an uptick in McDonald's sales through the third quarter, with a particularly strong performance in August and September. This improvement is attributed to successful promotional campaigns that have resonated well with consumers. Operators have expressed optimism about the fall promotional lineup, which seems to be driving a turnaround in sales figures.
Despite the positive sales trend in the U.S., BTIG's stance remains cautious. The firm acknowledges the sales recovery over the past two months but is not fully convinced that the recovery extends beyond the U.S. market. Additionally, BTIG is uncertain whether McDonald's has found a lasting solution to its value proposition challenges.
The analyst from BTIG commented on the situation, stating, "While we are impressed by the sales turnaround, we think this optimism is already captured in the shares following their recovery over the last two months."
The statement further elaborated on the uncertainties, "We're not convinced this recovery has been achieved outside the U.S., or that McDonald's has a permanent solution to its value needs, keeping us Neutral."
In other recent news, Baird raised McDonald's target to $320, reflecting an optimistic view of the company's third-quarter performance, particularly in the United States. Loop Capital maintained a Buy rating on McDonald's with a price target of $342.00, citing the company's decision to extend its $5 Meal Deal and robust sales growth in the third quarter of 2024.
TD Cowen also maintained a Hold rating on McDonald's shares, expressing anticipation about the potential U.S. launch of the new Big Arch burger. Citi raised McDonald's stock price target to $301, maintaining a Neutral rating, despite potential macroeconomic risks in international markets. BofA Securities, however, reduced McDonald's price target from $288.00 to $278.00, maintaining a Neutral rating, due to reported negative same-store sales growth across all operating segments in the United States.
InvestingPro Insights
Recent data from InvestingPro paints a detailed financial picture of McDonald's Corporation (NYSE:MCD) as it navigates through its current sales trends. With a market capitalization of $217.82 billion and a P/E ratio standing at 26.38, McDonald's reflects significant investor confidence, which may correlate with BTIG's findings of improved sales performance. The company's revenue growth over the last twelve months has been steady at 6.46%, suggesting a robust business model that could support the optimistic sales trajectory indicated by BTIG's franchise checks.
InvestingPro Tips highlight that McDonald's has a history of consistent dividend growth, having raised its dividend for 49 consecutive years, which could be a reassuring sign for investors looking for stable returns. Additionally, the stock is trading near its 52-week high, with a price percentage of 99.79% of this peak, potentially validating BTIG's observation of the stock's recovery in recent months. For investors seeking more in-depth analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/MCD, which can provide further guidance on McDonald's performance and outlook.
While the company's stock is indicated to be in overbought territory according to the Relative Strength Index (RSI), the low price volatility characteristic of McDonald's shares may appeal to investors who prioritize stability. These insights, combined with the real-time data and additional tips from InvestingPro, can help investors make informed decisions regarding their McDonald's stock positions in light of the sales trends reported by BTIG.
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