On Monday, Truist Securities adjusted its outlook on McDonald's Corporation (NYSE:MCD), reducing the fast-food giant's price target from $300 to $295, while keeping a Buy rating on the stock. The move follows McDonald's second quarter of 2024 performance, which saw the company miss estimates for same-store sales (SSS) and earnings per share (EPS).
McDonald's Corporation reported second-quarter earnings per share of $2.97, lower than the estimated $3.07. The company also experienced a surprising 1% decrease in its second-quarter global sales, the first decline in nearly three years. Furthermore, McDonald's U.S. comparable sales reported a decline of 0.7% for the quarter ending June 30, while international markets suffered a 1.1% sales drop.
Despite the recent challenges in sales, Truist Securities anticipates a turnaround for McDonald's. The firm believes that the current difficulties will be temporary and sees potential for the stock as a buying opportunity. This optimism is based on McDonald's efforts to develop more effective value strategies, including flexible options that could cater to a wider range of consumer demands.
The reduction in estimates and the price target by Truist Securities comes as McDonald's grapples with changing consumer behavior. The company is experiencing a shift as customers around the world become more value-oriented, a situation that has affected its usual market share expansion.
Moreover, Truist Securities expects that recent improvements in customer traffic will soon translate into sales growth for McDonald's. The company is also expected to benefit from the introduction of innovative menu items and marketing campaigns. Additionally, a stabilization or improvement in consumer demand is anticipated as inflationary pressures begin to ease, which could further aid in McDonald's recovery.
Financial services firm Stifel responded to these developments by lowering its price target for McDonald's from $265.00 to $257.00, while maintaining a Hold rating on the stock. Citi also reaffirmed its Neutral rating on McDonald's stock with a steady price target of $280.00.
Finally, McDonald's has been the subject of several analyst adjustments and legal developments, including a lost trademark dispute in the European Union over the "Big Mac" name for poultry products.
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