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Jefferies maintained a Buy rating and $360 price target on McDonald’s (NYSE:MCD) stock on Friday. The firm cited the fast-food giant’s defensive qualities and brand positioning during uncertain economic times as key factors supporting its outlook. This defensive positioning is reflected in the stock’s low beta of 0.56, according to InvestingPro data, which shows MCD has maintained dividend payments for an impressive 49 consecutive years.
The research firm expects McDonald’s to deliver low-single to mid-single-digit same-store sales growth, outpacing competitors. Jefferies also anticipates McDonald’s global unit growth to accelerate to 4-5% over the next several years, with negligible direct tariff impacts and no current signs of GLP-1 medication risks affecting sales. InvestingPro data reveals the company’s strong financial health, with an overall score of "GOOD" and particularly high marks in profitability metrics.
McDonald’s category-leading operating margins in the mid-to-high 40% range and significant free cash flow generation for dividends and share repurchases further strengthen the investment case, according to Jefferies. The firm also highlighted a longer-term general and administrative expense leverage opportunity, noting McDonald’s G&A represents 2.2% of system sales compared to Yum Brands at 1.7%.
Jefferies projects McDonald’s will achieve mid-single to high-single-digit revenue growth, approximately high-single-digit operating profit growth, and low-double-digit earnings growth. The firm’s $360 price target is based on an 18.5x EV/EBITDA multiple on 2026 estimates.
McDonald’s current valuation stands at 16.5x 2026 EV/EBITDA, while peers with similar growth expectations like Domino’s Pizza (NYSE:DPZ) and Yum Brands trade at approximately 18x, suggesting room for multiple expansion, according to Jefferies. The firm believes upside in results could push the stock closer to $400.
In other recent news, McDonald’s Corporation has been the subject of several analyst downgrades. Redburn-Atlantic downgraded McDonald’s stock from Buy to Sell, reducing the price target to $260 due to concerns over weakening traffic and pricing fatigue among U.S. customers. Morgan Stanley (NYSE:MS) also revised its rating from Overweight to Equalweight, adjusting the price target to $324, citing potential structural challenges despite strong operating margins. Erste Group followed suit by downgrading the stock to Hold, attributing the decision to expectations of sluggish sales growth in 2025. Meanwhile, TD Cowen maintained a Hold rating with a $305 target, noting projections of a 2.8% increase in U.S. same-store sales for the second quarter of 2025.
Additionally, McDonald’s announced the closure of its standalone CosMc’s stores, an initiative launched in 2023 to explore the beverage sector. The company plans to integrate CosMc’s-inspired flavors into its main menu as part of an upcoming U.S. beverage test. This strategic shift aims to leverage insights from the CosMc’s experiment to enhance McDonald’s beverage offerings. The company expressed optimism about future beverage developments, emphasizing a focus on innovation and taste. These recent developments highlight McDonald’s ongoing efforts to navigate market challenges and adapt its strategies for future growth.
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