McDonald’s (MCD) shares were tastier today on hopes that sales in the U.S. will be stronger in the second half of this year.
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Four-star TipRanks-rated analyst Dennis Geiger of UBS said the iconic fast-food chain is likely to post robust same-store sales driven by menu innovation and longer store opening hours.
Geiger, who reiterated his Buy rating and $350 price target on the stock, said that the McDonald’s stock represented a buying opportunity for investors following a recent pullback of the stock.
Indeed, its shares are down 9% over the last three months. Its U.S. same-store sales fell 3.6% in the first quarter, marking the biggest drop since 2020, with fast-food traffic sliding in 40 of the last 43 months.
That’s down to higher prices but also many lower-income customers now choosing to eat at home, as grocery prices are cheaper than eating out. More use of weight-loss drugs has also been blamed on a reduction in the appetite for Big Macs.
Positive Signs
However, although its first-quarter sales were “notably pressured similar to the industry, and lower income consumer weakness is likely a lingering headwind, we believe US results are positioned to strengthen in the second half,” Geiger said. “Our latest franchisee discussions also highlight optimism for a stronger rest of year.”
Factors including menu innovation, the $5 meal deal and expanded store hours this summer.
“US trends have likely softened since a strong April that was driven by the Minecraft movie collaboration, but we believe the latest same-store sales trends remain positive and should get a boost over the coming months,” Geiger wrote.
Is MCD a Good Stock to Buy Now?
On TipRanks, MCD has a Moderate Buy consensus based on 11 Buy, 14 Hold and 1 Sell ratings. Its highest price target is $364. MCD stock’s consensus price target is $328.89 implying an 13.01% upside.
