McDonald’s (NYSE:MCD) has made a name for itself as the king of fast, cheap food worldwide. Yet, there are signs that even this king may have feet of clay. A recent analyst note points out some potential problems, and with that, McDonald’s shares were down fractionally in Friday morning’s trading.
The word from M Science says that McDonald’s sales figures—not only same-store but also systemwide—are likely to be down against previous estimates. Moreover, McDonald’s latest promotion, the Kerwin Frost Box, is poised to falter in comparison to the Adult Happy Meal released the year prior. These factors added together suggest some potential trouble afoot for the popular fast food chain.
Every Cloud has a Silver Lining
Even as M Science looks at the field and finds it unpalatable, there are quite a few points of data to like about McDonald’s in its current form. For instance, McDonald’s has a familiar new promotional item in the offing, as the Double Big Mac is poised to return. For those not familiar, it’s pretty much what it says on the box: a Big Mac, but with four burger patties instead of the normal two. Further, it turns out the CosMC concept that McDonald’s brought out is making some headway. Reports noted that the spinoff restaurant saw twice as many visits as a regular restaurant in its first month. The question, however, is if it can keep that streak alive past the initial hype.
What is the Target Price for McDonald’s?
Turning to Wall Street, analysts have a Strong Buy consensus rating on MCD stock based on 22 Buys and seven Holds assigned in the past three months, as indicated by the graphic below. After a 10.39% rally in its share price over the past year, the average MCD price target of $322.50 per share implies 9.54% upside potential.
