McDonald’s: New All-Time Highs Are Inevitable

Key Points

• McDonald's value meals have put it in a position to gain share from competitors.
• Analysts are lifting their price targets, leading to new highs.
• Institutional activity is bullish and provides a strong tailwind for the price action in 2025.

New all-time highs are inevitable for McDonald’s NYSE: MCD because of its sustainable growth, cash flow, and capital returns. The question is how much higher its stock price can get, and the answer is still quite high.

The latest push into value meals has reignited a pricing war that only McDonald’s can win. Its scale and reach put it in a unique position that will allow it to expand its network and gain market share while competitors struggle with consumer headwinds.

As of mid-September, the growth outlook, which is likely to be low, includes a forecast for this company to sustain a mid-single-digit revenue compound annual growth rate (CAGR) and widen its margin through the beginning of the next decade. 

Margin expansion is critical, as it will allow the company to sustain its robust dividend distribution growth rate. The dividend distribution, worth an annualized 2.3% with shares near $305, has been growing at an inflation-busting 7% over the preceding five years and can be expected to grow at a solid, mid-single-digit pace for the foreseeable future.

Margin expansion is also critical to share buybacks, which provide significant leverage for shareholders. The buyback activity in FQ2 reduced the share count by more than 0.5%, improving shareholder leverage and helping the company control the cost of dividend payments.

Analysts See Value in McDonald’s Value Meal Pricing

The analysts’ response to McDonald’s value pricing is good. Citigroup analysts issued a price target increase because of it, setting the new Wall Street high based on numerous factors, including the impact of value meals, easy comps in upcoming quarters, and the potential for a P/E expansion.

McDonald’s stock trades at a healthy 25x earnings in 2025 but only 12x the 2031 consensus, suggesting its stock could double in price by then. 

In Citigroup’s view, there are two theses in play, one short and the other long. While value pricing and easing comps drive the near-term outlook, the long-term outlook is supported by store updates, accelerating unit growth, and the potential for energy drinks.

McDonald’s is testing consumer demand for several beverages, including a Red Bull-branded concoction that could unlock a new market. Energy drinks were worth an estimated $80 billion in 2024 and could significantly boost McDonald’s earnings.

Capturing only 1% of it is worth 2.8% revenue growth relative to the F2026 consensus estimate. 

While Citigroup is the most bullish on McDonald’s stock, its opinion is not a contrarian view. The data tracked by MarketBeat reveals some caution has entered the outlook, but the group is firm in the belief that this stock can set a new high.

The consensus, which has remained steady in Q3 and increased by 6.5% over the last year, forecasts a move to $325, with recent targets and high-end projections leading toward $381.

The consensus is sufficient for this stock to set a new high; a move to the high-end is worth approximately 25%. 

Institutional Trends Align With McDonald’s Stock Price Uptrend

Headwinds and hurdles aside, the institutional group is bullish on McDonald's and has been buying it on balance all year. Their activity provides a strong tailwind for the action, netting more than $2.50 in shares for every $1 sold in 2025, and is expected to continue as the year progresses.

The risk is that they will revert to selling at some point in the future, but that may be a long way off, due to the growth, cash flow, and capital return outlook. 

The price action is tepid in September, with the market pulling back within a near-term trading range.

However, the move aligns with consolidation within a bullish market, and the uptrend is intact. The critical support level is near $280 and is unlikely to be broken.

This market will likely continue to wind up within its range, confirming support at $280 or higher, before moving up to set a new high later this year or in early 2026.