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On Tuesday, Redburn-Atlantic revised its rating on McDonald’s Corporation (NYSE:MCD) shares, downgrading them from Buy to Sell, and simultaneously reduced its price target from $319.00 to $260.00. The fast-food giant, currently trading at $304.78 with a market capitalization of $217.93 billion, received this downgrade despite maintaining a GOOD Financial Health score according to InvestingPro data. Chris Luyckx, an analyst at the firm, cited various factors contributing to the decision, including weakening traffic, particularly in the United States market.
Luyckx pointed out that customers are experiencing pricing fatigue and are increasingly concerned with the value offered by McDonald’s. Additionally, the analyst mentioned the company’s exposure to long-term GLP-1 (glucagon-like peptide-1) risks, which could potentially affect the brand’s performance. While these concerns persist, InvestingPro data shows McDonald’s has maintained dividend payments for 50 consecutive years, demonstrating long-term financial resilience.
The valuation of McDonald’s shares, according to Luyckx, is currently near historical highs, making it a less attractive investment. He also noted that opportunities for margin expansion through general and administrative (G&A) leverage appear limited in the near term.
The new price target of $260 represents a P/E (price-to-earnings) multiple of 22.1 times the estimated earnings for the year 2025. The analyst’s assessment suggests that the stock’s current trading price of 25.1 times the 2025 estimated earnings is too high, prompting the downgrade in rating and price target.
In other recent news, McDonald’s Corporation has faced several significant developments. Morgan Stanley (NYSE:MS) downgraded McDonald’s stock from Overweight to Equalweight, adjusting the price target to $324 due to concerns over potential structural challenges and pressures on lower-income consumers. TD Cowen maintained a Hold rating with a $305 price target, projecting a 2.8% increase in U.S. same-store sales for the second quarter of 2025, driven by new menu additions like the McCrispy Strips. Erste Group also downgraded McDonald’s stock to Hold, citing expectations of sluggish sales growth throughout 2025, despite the company’s strong operating margins.
Additionally, McDonald’s announced the closure of its standalone CosMc’s stores, with plans to integrate CosMc’s-inspired flavors into its main menu. This move follows insights gained from the CosMc’s experiment, which aimed to expand McDonald’s presence in the beverage market. At the 2025 Annual Shareholders’ Meeting, McDonald’s shareholders voted on key issues, including board elections and executive compensation, with all 11 board nominees elected and executive pay approved by a significant majority. The appointment of Ernst & Young LLP as the independent auditor for 2025 was also ratified.
Shareholder proposals on advertising risks, climate transition plans, and diversity in executive compensation were considered, with most receiving limited support. These developments highlight McDonald’s ongoing strategic adjustments and the varied perspectives of analysts and shareholders on its future prospects.
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