‘Sell McDonald’s Stock Now,’ Says Redburn Atlantic

Shares of McDonald’s (MCD) are down on Tuesday after Redburn Atlantic gave the fast-food chain its only Sell rating. Interestingly, the analysts pointed to concerns about changing consumer habits, thanks to weight-loss drugs and inflation. The downgrade, which moved the rating down two levels from a Buy, caused shares to temporarily drop below $300 per share. McDonald’s has now seen its stock fall for six straight days after hitting near-record highs of more than $326 per share in mid-May.

Redburn analyst Chris Luyckx said that drugs like Ozempic could hurt McDonald’s sales by up to $428 million per year, or about 1% of total system sales, and the impact could grow over time. He also lowered his price target for the stock to $260, the lowest among analysts, which is about 15% below where the stock closed on Monday. It is also worth noting that U.S. same-store sales fell 3.6% in the first quarter, which is the biggest drop since 2020, and fast-food traffic has gone down in 40 of the last 43 months.

While McDonald’s has raised prices and increased the average amount spent per order, many lower-income customers are now choosing to eat at home, as grocery prices are cheaper than eating out. Luyckx said that although McDonald’s usually does well during economic slowdowns, recent price hikes have hurt its reputation for being affordable, which may be keeping customers away. Even though the stock is up 5% so far this year, he warned that growth might slow unless McDonald’s improves its value offerings and updates its menu.

Is MCD Stock a Good Buy?

Turning to Wall Street, analysts have a Moderate Buy consensus rating on MCD stock based on 12 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 $325.30 per share implies 8.3% upside potential.

See more MCD analyst ratings