Choppier Macro Environment Likely To Be A Catalyst For McDonald's, Says Analyst

Oppenheimer analyst Brian Bittner reiterated an Outperform rating on the shares of McDonald's Corp MCD with a price target of $315.00.

The company's investor conference has been scheduled for December 6.

The analyst believes MCD could follow similar playbook to 2020's Investor Day by providing a FY24/FY25 outlook for mid-single-digit system sales growth, EBIT margins of high-40s, and strategies to accelerate unit growth.

A capital expenditure update and formal capital return targets also appear likely, adds the analyst.

As menu pricing normalizes toward low single-digits, the analyst believes FY24 same-store sales (SSS) estimate is positioned to trend in-line with street's +3.4% assumption.

2024 is positioned to be an "in-line" year, and the analyst's work culminates in FY '24 EPS estimate of ($12.47) landing directly in-line with consensus.

A faster-than-expected acceleration in unit growth or SSS sustaining above 4% will be the most impactful catalysts for valuation expansion, according to the analyst.

The analyst believes MCD remains well-positioned to grow system-wide sales by mid-single-digits on an annual basis, driven by accelerating unit growth to ~4%.

Interestingly, in the '08–'09 recession, MCD was a relative sales beneficiary and was the only public restaurant company that showcased positive earnings revisions throughout the downturn, writes the analyst.

This, the analyst says, suggests a choppier macro environment could represent a positive catalyst from here.

Price Action: MCD shares are trading higher by 1.47% at $285.96 on the last check Friday.

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