By Davit Kirakosyan
Jefferies raised the price target on McDonald's (NYSE:MCD) to $320.00 from $315.00 and maintained a Buy rating, emphasizing the company's increasing digital momentum, exemplified by the successful launch of the Cardi B Meal (generating comparable buzz to previous J Balvin/Saweetie Meals) and a surge in active rewards members.
Additionally, there is potential for both SG&A savings and accelerating unit growth to provide upside to 2024 EBITDA expectations.
In Q4, digital sales accounted for over 35% of the top 6 markets' system sales, with approximately 40% from the U.S. and 90% from China.
Jefferies anticipates the digital mix to continue growing at a decent pace over the next few years driven by a robust mobile app experience, increasing kiosks, and the expanding MyMcDonald's Rewards program, which now has 50 million active members in the top 6 markets, including 28M in the U.S.
Meanwhile, Loop Capital said that according to their U.S. franchisee checks, McDonald's same-store sales growth slightly exceeded consensus expectations in Q1. The sales were up 8.0-8.5% in the last 6-7 weeks and grew 7.5-8.0% for the full Q1, which is in line with Loop Capital's estimate but ahead of consensus, which was 7.3%.
Loop Capital reiterated its estimates, projecting 7.5% growth for McDonald's U.S. comps in Q1/23, 4.9% growth for 2023, and 3.0% growth for 2024. Their EPS estimates also remain unchanged at $2.01 for Q1/23, $10.57 for 2023, and $11.75 for 2024.
Loop Capital reiterated its Buy rating and $328 price target on the stock.
Mcdonald's will report its Q1/23 earnings results on May 3.