After several years of raising prices and facing growing competition in the fast-food space, McDonald’s (MCD) may struggle to attract more customers and grow earnings in the near term, according to Argus. Because of this, Argus downgraded McDonald’s stock from Buy to Hold with no price target, as five-star analyst John Staszak believes that McDonald’s stock, which currently trades at a high valuation compared to peers, is likely to move more in line with the overall market from here.
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In addition, Staszak reduced his 2025 earnings per share forecast for McDonald’s from $13.20 to $12.30, moving it closer to the current Wall Street consensus of $12.27. It is also worth noting that McDonald’s stock is trading at 24.6 times the new EPS estimate, which is higher than the 22x average for the restaurant industry. Staszak believes that this rich valuation already reflects the company’s reputation as a safe-haven stock. This means that the market has already priced in McDonald’s strengths, therefore limiting short-term upside potential.
Interestingly, though, despite pulling back his Buy rating, Staszak still holds a positive long-term view on McDonald’s. He points out that the company’s broad global presence, strong track record of share buybacks, and reliable dividend growth continue to make McDonald’s an attractive investment for those with a long-term horizon. While near-term traffic may remain soft, Staszak sees the stock as a solid choice for patient investors looking for consistent returns over time.
Is MCD Stock a Good Buy?
Overall, analysts have a Moderate Buy consensus rating on MCD stock based on 11 Buys, 13 Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average MCD price target of $328.89 per share implies 8.1% upside potential.
