UPDATE: Goldman Sachs Reiterates Buy Rating, Lowers PT for McDonald's
In a company update published earlier today, the Goldman Sachs Group, Inc. reiterated its Buy rating for McDonald's Corporation (NYSE: MCD), but lowered its price target from $105.00 to $100.00, related to a recent meeting with Don Thompson and Tim Fenton, MCD's CEO and COO designates, respectively.
Goldman Sachs went on to say “We see Mr. Thompson and Mr. Fenton as solid stewards of the MCD brand and expect continued share gains over time. We see three primary takeaways. (1) MCD seems firmly in control of its business despite choppiness in the macro. It is accelerating unit growth, bringing new products to market faster, seeing solid lifts from its remodels and is gaining share of voice. (2) The company is insulated from, but not immune from, the slowing European macro. SSS may remain in the low- to mid-single digits, but it will likely be at the expense of profitability as the company invests in value. Furthermore, the weaker euro is negatively impacting earnings. We now believe forex may clip EPS by about $0.15 in 2012. (3) Margins may rebound solidly in 2013. MCD emphasized that margin pressures in 1Q12 were driven mostly by commodities. Our food cost model suggests this was the peak, and that MCD may see meaningful relief by 2H12 and into 1H13. We do not believe this yet appears in consensus and think it serves as a buffer to the negative currency translation impact. Also, some one-time costs such as the Olympic sponsorship will not repeat in 2013.”
McDonald's Corporation closed yesterday at $89.34.
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