McDonald’s stock rises on strong international sales

On Tuesday, shares of McDonald’s Corporation (NYSE:MCD) saw an uptick following the company’s earnings report, which highlighted sales growth in several international markets. The stock, currently trading near its 52-week high with a market capitalization of $221 billion, has delivered a 16.5% return over the past six months. BTIG analysts maintained a Neutral rating on the fast-food giant’s stock. According to InvestingPro analysis, the stock appears to be trading above its Fair Value, with technical indicators suggesting overbought conditions.

The earnings release revealed that McDonald’s experienced a sales boost in the Middle East, Japan, and some European countries, which contributed to the stock’s positive performance. With a robust revenue of $25.9 billion in the last twelve months and a healthy gross profit margin of 56.6%, the company continues to demonstrate strong financial fundamentals. Despite a weaker showing in the U.S. market, the results did not come as a surprise to investors, who had already factored in the brand’s ongoing recovery from food safety concerns that emerged in October.

BTIG analysts pointed out that the current challenge for McDonald’s is to transition lower-income customers from promotional discounts to regular-priced menu items, such as chicken tenders and snack wraps, in future quarters. The firm’s stance remains unchanged, with a Neutral rating, as analysts see limited potential for an increase in earnings per share (EPS) estimates for the current year.

The company’s strategy and its impact on future earnings will be closely watched by investors, as McDonald’s strives to balance value offerings with more premium products to drive revenue growth. The fast-food chain’s ability to adapt to changing consumer preferences and market conditions will be a key factor in its performance moving forward.

In other recent news, McDonald’s Corporation has seen a series of stock target adjustments following its fourth-quarter 2024 performance. KeyBanc Capital Markets raised its price target from $320 to $335, maintaining an Overweight recommendation, despite a slight reduction in the 2025 earnings per share (EPS) forecast to $12.39 due to foreign exchange impacts and marginally lower margins. Bernstein analysts also increased their price target from $290 to $300, maintaining a Market Perform rating, while BMO Capital Markets upped its target from $335 to $340, reiterating an Outperform rating.

In contrast, JPMorgan increased the fast-food giant’s price target to $300 from $280, while keeping an Overweight rating. Lastly, Citi analysts maintained a Buy rating on McDonald’s shares and increased the price target to $360 from the previous $336. These adjustments are based on recent developments such as stronger-than-expected international same-store sales growth, positive traffic growth, and the company’s strategic initiatives.

However, analysts also noted potential challenges, including declining same-store sales and margin contraction in the U.S. market, ongoing macroeconomic pressures in certain international markets, and a potential impact of tariffs. Despite these challenges, the analysts expressed confidence in McDonald’s long-term ability to achieve market share gains and improve financial performance.

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