What Wall Street is Saying About McDonald's

Andrew Klips  |

Price targets on fast food restaurant company McDonalds Corp. (MCD) seem to coming together around $100 per share based upon recent analyst commentary. Friday morning, Janney Capital Markets' analyst Mark Kalinowski cut his rating on the burger maker from “buy” to “neutral,” citing concerns over same store sales and “challenging year-over-year comparisons” that may be signaling a deceleration in the company. Kalinowski said that he is hearing industry buzz that same store sales in September for McDonalds could be the worst figures of 2012 for that metric.

The analyst cut his price target on Oak Brook, Illinois-based McDonalds from $105 to $100 with the ratings move. He also noted that shares have risen from about $86 to more than $93 each in less than two months; perhaps not offering the best value at the moment.

Conversely, Analysts at Zacks boosted their rating on McDonalds Thursday. Despite macroeconomic challenges, Zack’s noted in a letter to investors, “…we remain optimistic about the company’s persistent efforts to emerge out of this tough time.” The firm lifted its rating from “underperform” to “neutral.”

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Zack’s is maintaining a $98 price target on McDonalds. On September 17, two other outfits, Piper Jaffray & Company and Credit Suisse, shuffled their price targets on MCD to the upside.

Piper Jaffray is leveraging growth overseas as a catalyst for growth. The company noted, “At approximately half the size of the United States in unit terms currently, but growing approximately 5x faster, we're incrementally more confident in the initiatives in place to sustain this growth. We have increased our expectations for new unit growth and upwardly revised our FY13 earnings estimates which also leads us to increase our price target to $100 based on 17x FY13E EPS (vs. 16x prior).”

The firm reiterated its “overweight” rating while it increased its price target from $93 to $100 per share. Credit Suisse matched the move of Piper Jaffray and now holds identical rating and price target.

Coming in on the lower side of things, earlier this month, analysts at Robert W. Baird reiterated an “outperform” rating for MCD on September 12. Baird holds a $95.00 price target on the stock.

McDonalds has a 52-week high of $102.22 and missed Wall Street estimates with its last earnings report on July 23. The downgrade today had shares open lower by more than $1 per share with the price dropping below $91 for the first time in two weeks.

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