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On Thursday, KeyBanc Capital Markets adjusted its financial outlook for McDonald’s Corporation (NYSE:MCD), increasing the price target to $340 from the previous $335, while maintaining an Overweight rating on the shares. The adjustment reflects a mix of challenges and positive expectations for the upcoming quarter. Currently trading at $313.58, McDonald’s stock sits near its 52-week high of $326.32, with analyst targets ranging from $280 to $360. According to InvestingPro analysis, the stock is trading above its Fair Value, suggesting careful consideration for new positions.
The fast food industry has faced a tough first quarter, according to KeyBanc analyst Eric Gonzalez. Factors such as adverse weather conditions, calendar shifts, an unusually severe flu season, and perceived issues with affordability have impacted the sector. Specifically, McDonald’s has been dealing with the aftermath of an E. coli outbreak, which has further complicated operations. Despite these challenges, InvestingPro data shows McDonald’s maintains a strong financial health score of GOOD, with a solid dividend yield of 2.26% and a 49-year history of consecutive dividend increases.
Despite these setbacks, Gonzalez anticipates a turnaround in the second quarter of 2025. Initiatives expected to drive market share gains and potentially re-energize McDonald’s growth include new marketing strategies and product innovation. These efforts are projected to lead to a recovery in sales momentum. With a market capitalization of $224 billion and revenue growth forecast of 2% for 2025, investors can track McDonald’s progress through comprehensive analysis available in the Pro Research Report, one of 1,400+ detailed company reports on InvestingPro.
As a result of these factors, KeyBanc has revised its same-store sales (SSS) growth estimate for McDonald’s USA, lowering the first quarter prediction to a 2% decline. However, the firm is more optimistic about the second quarter, raising the SSS growth estimate to 3.5%. This positive outlook is based on industry conversations and proprietary data.
The Overweight rating reiteration and price target increase take into account revised sales forecasts and the effects of foreign exchange rates, which are expected to provide a tailwind. The updated 2025 earnings per share (EPS) estimates and the new price target reflect KeyBanc’s confidence in McDonald’s potential for sales growth and operational improvements in the near term.
In other recent news, McDonald’s has released its earnings and revenue results, signaling significant developments for the company. Erste Group recently upgraded McDonald’s stock rating from Hold to Buy, citing strong financial health and stable operating margins. The analysts project sales growth for McDonald’s International segment, which is expected to outpace U.S. sales in the coming years. Additionally, McDonald’s has issued $1.5 billion in medium-term notes as part of its financial strategy, with the funds potentially being used for refinancing or capital projects.
In terms of leadership, McDonald’s announced executive changes, with Gillian McDonald transitioning to a new role and Manuel JM Steijaert taking over as Executive Vice President – President, International Operated Markets. The company has also updated its executive incentive plan to align with performance metrics such as operating income and Systemwide sales. BofA Securities has lifted McDonald’s stock target to $316, maintaining a Neutral rating, and noting the company’s focus on value offerings to drive traffic despite economic challenges.
These strategic moves, including leadership adjustments and financial maneuvers, reflect McDonald’s efforts to maintain its competitive edge and adapt to market conditions. The company’s ongoing initiatives and analyst feedback provide insights into its operational and financial trajectory.
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