TD Cowen analyst Andrew Charles raised the price target on McDonald’s (MCD) stock from $305 to $315 but maintained a “Hold” rating on the shares. The renewed price target reflects a 2.4% upside potential from current levels and is based on a 23x forward-year two price-to-earnings (P/E) ratio, in line with MCD’s five-year average. Commenting on McDonald’s improving U.S. sales and promotional efforts, Charles stated, “Every day things change, but basically they remain the same.”
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Charles is a top analyst on TipRanks, ranking #841 out of the 9,916 analysts tracked. He has a 54% success rate and an average return per rating of 9.20%.
Here’s Why Charles Remains a Hold on MCD
The burger chain reported better-than-expected results for the second quarter of fiscal 2025. MCD’s sales jumped 5% year-over-year, and adjusted earnings rose 7.4% year-over-year to $3.19 per share. Although same-store sales (SSS) in the U.S. showed marked improvement over prior quarters, McDonald’s is still facing a “soft lower income consumer backdrop,” Charles added. He also agrees that U.S. SSS are unlikely to miss over the next three quarters but believes that MCD stock is trading at a premium. Hence, Charles does not expect significant upside in the shares.
The analyst highlighted that McDonald’s management did not offer Q3 guidance owing to concerns regarding “middle & lower-income consumer” groups. Nonetheless, the company expects outperformance in the second half compared to the first half of 2025, with Q4 expected to perform better than Q3.
Charles noted that reduced spending from lower-income consumers is expected to persist even in the second half, and thus McDonald’s is bound to prioritize value to attract customers. The company plans to do so by increasing the number of users in the MyMcDonald’s Rewards loyalty program, which currently accounts for 25% of sales.
The program has helped increase how often members visit, from 10 visits per year before joining to 26 visits after joining. The company also plans to adjust prices on key menu items to re-attract customers and shift their overall view of McDonald’s pricing.
Is MCD a Good Stock to Buy Now?
Analysts remain divided on McDonald’s long-term outlook. On TipRanks, MCD stock has a Moderate Buy consensus rating based on 10 Buys, 10 Holds, and two Sell ratings. The average McDonald’s price target of $339.78 implies 10.4% upside potential from current levels. Year-to-date, MCD stock has gained 7.4%.
Please note that these ratings were issued before the Q2 report and may change once analysts update their recommendations.
