McDonald's Analysts Cut Their Forecasts After Downbeat Earnings

McDonald's Corp MCD posted worse-than-expected second-quarter financial results on Monday.

McDonald's reported a second-quarter FY24 sales decline of 0.12% year-on-year to $6.490 billion, missing the analyst consensus of $6.608 billion. Adjusted EPS of $2.97 missed the analyst consensus estimate of $3.07, according to data from Benzinga Pro.

Global comparable sales decreased 1.0%, while U.S. comparable sales slipped 0.7%.

“We are confident that Accelerating the Arches is the right playbook for our business and as consumers are more discriminating with their spend, we are focused on the outstanding execution of delivering reliable, everyday value and accelerating strategic growth drivers like chicken and loyalty,” said CEO Chris Kempczinski.

McDonald’s expects net restaurant unit expansion to contribute nearly 2% to 2024 Systemwide sales growth in constant currencies. It anticipates that the full-year 2024 Selling, general and administrative expenses will be about 2.2% of Systemwide sales, and the 2024 operating margin will be in the mid-to-high 40% range.

McDonald’s shares gained 3.7% to close at $261.42 on Monday.

These analysts made changes to their price targets on McDonald’s following the announcement.

• JP Morgan analyst John Ivankoe maintained McDonald’s with an Overweight rating and lowered the price target from $290 to $270.
• BMO Capital analyst Andrew Strelzik maintained the stock with an Outperform rating and slashed the price target from $330 to $315.
• Barclays analyst Jeffrey Bernstein maintained McDonald’s with an Overweight and lowered the price target from $320 to $300.
• Truist Securities analyst Jake Bartlett maintained the stock with a Buy and slashed the price target from $300 to $295.

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