Market Overview

Stephens Downgrades McDonald's Ahead Of Q1 Report

Stephens Downgrades McDonald's Ahead Of Q1 Report
Related MCD
10 Biggest Price Target Changes For Thursday
Morgan Stanley: The Street Underestimates McDonald's Store Remodel Story
Steve Easterbrook: McDonald's CEO Analysis (TalkMarkets)

McDonald's Corporation (NYSE: MCD) is scheduled to report first-quarter results April 30, and Stephens shifted to a neutral stance on the restaurant chain ahead of the print. 

The Analyst

Stephens' Will Slabaugh downgraded McDonald's' stock rating from Overweight to Equal Weight with a price target lowered from $185 to $170.

The Thesis

Despite the downgrade, McDonald's long-term story remains compelling, Slabaugh said in a Monday note.

The company's streak of posting strong mid-single digit comp growth over the past few quarters should "not be considered the norm," the analyst said. A more realistic same-store sales assumption growth figure for the U.S. is 2-percent growth and 2.9-percent growth globally, he said. These figures still represent a "good" year for a restaurant chain, with average unit volume that's double that of McDonald's closest peers, Slabaugh said.

Sell-side estimates of a resurgence to 3.5-percent comps in the second through fourth quarters are "optimistic," the analyst said. 

The analyst is modeling for McDonald's to earn $1.65 per share in Q1 on same-store sales growth of 2 percent. By comparison, the Street is expecting the company to earn $1.67 per share on same-store sales growth of 3.2 percent.

"Although we remain constructive on the brand longer-term and have confidence in the management team's ability to sustain a low-single digit comp trajectory, we are moving to the sidelines and see shares as fairly valued at this point," the analyst said.

Price Action

Shares of McDonald's were trading down 0.50 percent after the open Monday. 

Related Links:

McDonald's: Buy The Pullback, Says BMO

Dear Activists: Buying Stock Can Effect More Change Than Selling It

Photo by Bryan Hong/Wikimedia. 

Latest Ratings for MCD

Nov 2018Morgan StanleyUpgradesEqual-WeightOverweight
Oct 2018CitigroupMaintainsNeutralNeutral
Oct 2018JefferiesMaintainsBuyBuy

View More Analyst Ratings for MCD
View the Latest Analyst Ratings

Posted-In: Analyst Color Short Sellers Downgrades Price Target Restaurants Top Stories Analyst Ratings General Best of Benzinga


Related Articles (MCD)

View Comments and Join the Discussion!

Latest Ratings

BAPItau BBAUpgrades274.0
DVNJP MorganDowngrades37.0
EOGJP MorganUpgrades118.0
EXPDGoldman SachsDowngrades68.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

3 Big Questions To Ask Yourself Before Buying a Home

Netflix Earnings Preview: International Subscriber Growth In Focus