While recent results suggest that customers are flocking to McDonald’s Corporation (NYSE:MCD), investors shouldn’t get used to it. That’s the take from one firm, which has just downgraded the Golden Arches while slashing its price target.
CNBC shares the firm’s take on McDonald’s.
Investors shouldn’t get used to McDonald’s recent strong sales growth, according to Stephens Inc., which downgraded the stock to equal weight from overweight.
“Mid-single-digit comparable growth of recent quarters (especially in U.S.) was a result of successful initiatives coming together at once and should not be considered the norm,” analyst Will Slabaugh wrote Monday.
According to consensus estimates, McDonald’s will see same-store sales growth of 2.9 percent in 2018. Not so, says Slabaugh, who estimates that 2 percent is a more reasonable expectation. In the company’s latest quarterly financial report, McDonald’s reported global same-store sales growth of 5.5. percent, which marked its fastest pace in the past six years.
Slabaugh has also dropped his price target for McDonald’s to $170 from $185.
McDonald’s Corporation shares were trading at $160.90 per share on Monday morning, down $0.83 (-0.51%). Year-to-date, MCD has declined -5.93%, versus a 0.20% rise in the benchmark S&P 500 index during the same period.