On Tuesday, Truist Securities revised its price target for McDonald's Corporation (NYSE:MCD) shares, reducing it from $320.00 to $300.00, while maintaining a Buy rating on the stock. The adjustment follows a close analysis of McDonald's second-quarter performance, which indicated a slight underperformance compared to the consensus estimates.
The Truist Card Data estimated that for the second quarter of 2024, McDonald's U.S. system sales reached approximately $13.5 billion, which is 1.6% below the consensus that suggested a Same-Store Sales (SSS) growth of +0.7%. This estimate aligns closely with Truist's revised forecast, which now stands at an SSS decline of -1.0%, a downward revision from the previously anticipated 'flat' SSS.
The year-over-year growth for McDonald's seemed to slow down in May and June, compared to April when SSS were "roughly flat". The introduction of McDonald's '$5 Meal Deal' on June 25 did not generate the expected sales momentum, with the week ending June 30 showing the weakest sales growth in the quarter.
Despite the softer sales figures, the impact on McDonald's adjusted EBITDA for the second quarter of 2024 is minimal. Truist only slightly lowered its adjusted EBITDA estimate to $3.594 billion from the previous $3.599 billion, which still falls short of the consensus estimate of $3.663 billion.
The reduction in the price target to $300 is attributed to a lower target multiple, reflecting Truist's anticipation of reduced outperformance by McDonald's. The new target represents a recalibration of expectations for the fast-food giant's stock in the near term.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.