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McDonald's Is Well Positioned Irrespective Of The Consumer Backdrop, Says Analyst

  • Credit Suisse analyst Lauren Silberman reiterated an Outperform rating on the shares of McDonald’s Corp MCD and raised the price target from $292 to $298.
  • The analyst believes MCD strength continued in 4Q22 & overall sentiment remains positive broadly.
  • Consensus models U.S. same-store sales (SSS) of 8.1%, which likely embeds low double-digit SSS in October & normalized SSS through the rest of 4Q, said the analyst.
  • Consensus models 4Q EPS of $2.45, up 10% YOY, and EPS growth of 6.5% in 2023 and 9.5% in 2024, added the analyst.
  • The analyst believes there could be an upside to 2023/2024 estimates from cost savings from the recently announced organizational restructuring as well as FX.
  • Looking ahead into 2023, we like MCD’s defensive business model, believe MCD is well positioned to execute irrespective of the consumer backdrop, and believe MCD’s value leadership & operational strength should support relative resilience globally.
  • The analyst believes MCD maintained momentum in 4Q, supported by a contribution from marketing, digital initiatives, and select menu innovation.
  • The launch of the adult Happy Meal & return of Halloween Pails drove low double-digit SSS in October & record digital transactions.
  • MCD generated 7.7 million digital app downloads in 4Q, the highest in the history of our data set, up nearly 50% YOY, and 2022 app download growth was up nearly 40%, outperforming all burger peers, added the analyst.
  • Price Action: MCD shares are trading higher by 0.41% at $271.55 on the last check Wednesday.

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