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Investing.com - Bernstein SocGen Group has reiterated its Market Perform rating and $310 price target on McDonald’s (NYSE:MCD) as the fast-food giant intensifies its value strategy. According to InvestingPro data, the stock is trading near its 52-week high at $315.76, with analysts’ targets ranging from $260 to $373.
The company is investing $40 million in incremental marketing support this month to launch Extra Value Meals, which will be priced 15% lower than individually sold items, according to Bernstein analyst Danilo Gargiulo. With a strong financial health score rated as "GOOD" by InvestingPro, McDonald’s maintains a solid foundation for such initiatives while continuing its 49-year streak of dividend increases.
McDonald’s management expects the impact of this value initiative to exceed that of its previous $5 meal deal, given that approximately 18-20% of consumers purchase combo meals and the company is making a broad marketing investment.
The investment is not expected to materially change McDonald’s operating margin for fiscal year 2025, though Bernstein noted the company appears willing to expand support programs or offer more limited-time offers if needed to generate cashflow neutrality for franchisees.
Bernstein views McDonald’s as defensively positioned in an inflationary environment, with the analyst stating that the company’s pricing reduction could help the category regain relative value perception as tariff impacts become more noticeable to consumers.
In other recent news, McDonald’s has issued $1.3 billion in medium-term notes, with $550 million due in 2031 and $750 million due in 2036. This financial move was made under the company’s existing medium-term notes program. In addition to these developments, McDonald’s has garnered attention from analysts, with TD Cowen raising its price target to $330 due to growing confidence in the company’s European operations. Meanwhile, Stifel has increased its price target to $315, highlighting McDonald’s strategy to lower prices on combo meals to enhance value perception.
TD Cowen has maintained its Hold rating on McDonald’s stock, emphasizing the company’s upcoming value pricing strategy, which includes offering combo meals at a 15% discount compared to purchasing items separately. This initiative is expected to roll out in early September. Furthermore, McDonald’s plans to introduce new limited-time breakfast and combo meal offers, with significant discounts on popular items like the Big Mac and 10-piece McNuggets. These efforts reflect McDonald’s ongoing commitment to improving its value perception among consumers.
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