McDonald’s Corp. (MCD) shares are on the rise Tuesday, buoyed by a wave of optimism from analysts who have upgraded their price targets ahead of the fast-food giant’s third-quarter earnings report.
Several analysts have expressed confidence in McDonald’s upcoming performance, citing a combination of factors including successful menu innovations, compelling promotions, and favorable foreign exchange rates.
Among the bullish analysts, Morgan Stanley’s John Glass maintained his Overweight rating and raised the price target from $296 to $340. Evercore ISI Group’s David Palmer also echoed the sentiment, maintaining his Outperform rating and boosting the price target from $320 to $340. Truist Securities Analyst Jake Bartlett went even further, raising the price target from $295 to $350 while reiterating his Buy rating.
Truist is particularly optimistic about McDonald’s third-quarter performance, predicting a beat in same-store sales (SSS) and earnings. Their analysis of card data suggests that McDonald’s U.S. system sales for the third quarter are projected to reach $13.7 billion, exceeding consensus estimates by 0.7%. Bartlett further anticipates SSS growth of +0.5%, a significant improvement from earlier estimates of -1.5%. This positive outlook is attributed to the success of menu innovation, including the launch of the Chicken Big Mac on October 10th, and successful promotions like the $5 Meal Deal. The Collector’s Meal promo, which launched in August, also contributed to sales growth acceleration.
Adding to the positive outlook, Truist expects McDonald’s to benefit from favorable foreign exchange rates, leading the firm to increase its adjusted EBITDA estimate to $3.756 billion.
Looking ahead to the third-quarter earnings report, analysts are projecting earnings per share (EPS) of $3.19 and revenue of $6.790 billion.
At the time of writing, McDonald’s shares were trading up by 1.06% at $313.12, reflecting investor confidence in the company’s positive outlook. The upward trend suggests that investors are anticipating a strong earnings report and are optimistic about the company’s future prospects.