Analyst Jon Tower from Citi maintained a Buy rating on McDonald’s and increased the price target to $373.00 from $365.00.
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Jon Tower’s rating is based on McDonald’s strategic efforts to reclaim its position as a value leader in the US quick-service restaurant sector. The company is adjusting its pricing strategy on combo meals and increasing its marketing spend by $40 million to enhance value messaging. This initiative is expected to attract lower-income consumers, boost market share, and improve same-store sales in the US, which, along with strong performance in international markets, is anticipated to drive earnings per share and valuation multiples higher over time.
Furthermore, discussions with McDonald’s leadership, including CEO Chris Kempczinski and CFO Ian Borden, highlighted the company’s commitment to maintaining operational margins within the mid-to-high 40% range by 2025. The company’s focus on value meals, supported by franchisee participation, and successful value repositioning in international markets, suggests a positive consumer response in the US. These factors contribute to Jon Tower’s optimistic outlook on McDonald’s stock, warranting a Buy rating.
Tower covers the Consumer Cyclical sector, focusing on stocks such as Starbucks, Chipotle, and Domino’s Pizza. According to TipRanks, Tower has an average return of 12.6% and a 60.65% success rate on recommended stocks.
In another report released today, UBS also maintained a Buy rating on the stock with a $350.00 price target.