Melius Research Upgrades McDonald's (NYSE:MCD) to Strong Sell

Key Points

• Melius Research upgraded McDonald’s to a “strong sell”, while other analysts have issued mixed ratings and lowered price targets. Despite this, the broader consensus remains “Moderate Buy,” with an average target of $297.27.
• McDonald’s shares opened at $233.32, near their 52-week low of $233.23 and below both their 50-day and 200-day moving averages, reflecting recent weakness in the stock.
• The company’s latest quarterly results were mixed: adjusted EPS of $3.38 exceeded expectations, but revenue of $7.10 billion fell slightly short of estimates. Analysts and investors remain focused on negative comparable sales, inflation-driven affordability pressure and the costs of the company’s NEXT strategy.

McDonald's (NYSE:MCD - Get Free Report) was upgraded by equities researchers at Melius Research to a "strong sell" rating in a research report issued to clients and investors on Monday, Zacks reports.

A number of other analysts also recently issued reports on the stock. Oppenheimer decreased their price objective on shares of McDonald's from $325.00 to $295.00 and set an "outperform" rating for the company in a report on Thursday, September 24th. Mizuho dropped their target price on shares of McDonald's from $300.00 to $290.00 and set a "neutral" rating on the stock in a research note on Friday, July 31st. Needham & Company LLC reissued a "buy" rating on shares of McDonald's in a research report on Monday, September 21st. TD Cowen decreased their price target on shares of McDonald's from $282.00 to $270.00 and set a "hold" rating for the company in a research note on Thursday. Finally, Royal Bank Of Canada decreased their price target on shares of McDonald's from $290.00 to $285.00 and set a "sector perform" rating for the company in a research note on Thursday, September 24th. One research analyst has rated the stock with a Strong Buy rating, seventeen have assigned a Buy rating, eleven have assigned a Hold rating and one has given a Sell rating to the company. Based on data from MarketBeat.com, McDonald's currently has a consensus rating of "Moderate Buy" and an average price target of $297.27.

McDonald's Trading Down 1.3%

MCD stock opened at $233.32 on Monday. The stock's fifty day simple moving average is $261.55 and its two-hundred day simple moving average is $279.74. McDonald's has a 1-year low of $233.23 and a 1-year high of $341.75. The stock has a market cap of $165.11 billion, a P/E ratio of 18.95, a P/E/G ratio of 2.56 and a beta of 0.41.

McDonald's (NYSE:MCD - Get Free Report) last announced its earnings results on Tuesday, August 4th. The fast-food giant reported $3.38 earnings per share (EPS) for the quarter, beating the consensus estimate of $3.32 by $0.06. The firm had revenue of $7.10 billion during the quarter, compared to analyst estimates of $7.13 billion. McDonald's had a negative return on equity of 572.06% and a net margin of 31.72%.The business's revenue was up 3.7% compared to the same quarter last year. During the same period last year, the firm posted $3.19 EPS. As a group, analysts forecast that McDonald's will post 12.86 earnings per share for the current fiscal year.

Hedge Funds Weigh In On McDonald's

A number of institutional investors and hedge funds have recently added to or reduced their stakes in the business. Envestnet Portfolio Solutions Inc. increased its stake in shares of McDonald's by 41.3% in the second quarter. Envestnet Portfolio Solutions Inc. now owns 23,867 shares of the fast-food giant's stock worth $6,451,000 after purchasing an additional 6,980 shares in the last quarter. State Street Corp boosted its holdings in McDonald's by 1.8% in the 2nd quarter. State Street Corp now owns 36,080,505 shares of the fast-food giant's stock worth $9,752,921,000 after buying an additional 646,675 shares during the period. Security National Bank of Sioux City Iowa IA bought a new position in McDonald's in the 2nd quarter worth approximately $71,000. Anchor Investment Management LLC grew its stake in McDonald's by 3.6% in the 2nd quarter. Anchor Investment Management LLC now owns 15,607 shares of the fast-food giant's stock valued at $4,219,000 after buying an additional 537 shares in the last quarter. Finally, Bullseye Investment Management LLC purchased a new position in McDonald's in the 2nd quarter valued at approximately $133,000. Institutional investors own 70.29% of the company's stock.

Key Headlines Impacting McDonald's

Here are the key news stories impacting McDonald's this week:

• Positive Sentiment: McDonald’s is launching a drive-thru advertising media network, initially piloted at 450 company-owned U.S. restaurants. Management believes the platform could eventually become a roughly $1 billion business, offering a potential high-margin revenue stream beyond food sales. McDonald's launches media network with drive-thru ads
• Positive Sentiment: The company’s NEXT strategy targets approximately 250 basis points of restaurant-level efficiency gains through equipment, technology and process upgrades. Although the investments may weigh on near-term results, they could improve productivity and support longer-term growth. How McDonald’s is investing in its Next playbook
• Positive Sentiment: McDonald’s raised its dividend again, reinforcing its status as a long-standing income stock. Analysts cited strong franchising economics and cash generation as key reasons the payout remains supportable despite weaker traffic. McDonald’s Dividend Is Funded by Something Other Than Burgers
• Neutral Sentiment: A redesigned loyalty program seeks to reactivate approximately 150 million infrequent guests, with benefits tied to partners including Uber and Disney+. The initiative could improve traffic, but its financial impact is not yet established. McDonald's Targets 150 Million Infrequent Guests With Tiered Loyalty Program
• Negative Sentiment: Morgan Stanley lowered McDonald’s estimates through 2030 and cut its price target, reflecting the cost and timing of NEXT investments. Other analysts, including Melius Research, also reduced targets after the investor day. McDonald's Estimates Lowered to Reflect New Financial Targets
• Negative Sentiment: Negative U.S. comparable sales, persistent inflation and rising menu prices are pressuring affordability and franchisee economics. McDonald’s also faces concerns that GLP-1 weight-loss drugs could reduce demand for some fast-food occasions. Is McDonald’s Moat Narrowing as GLP-1 Drugs Reshape Menus?

About McDonald's

McDonald’s Corporation is a global quick-service restaurant company that operates and franchises restaurants under the McDonald’s brand. Its restaurants serve a menu that includes hamburgers, cheeseburgers, chicken sandwiches, French fries, breakfast items, desserts, salads, beverages and coffee. Offerings vary by market, and many locations provide drive-thru service, delivery and digital ordering through the McDonald’s mobile app.

The company operates through a heavily franchised business model, with restaurants owned and operated by independent franchisees, affiliates and the company itself.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.