Citi boosted its price target on Buy-rated McDonald’s Corporation (NYSE:MCD) to a Street-high $381.
Analyst Jon Tower pointed to near-term factors such as the aggressive value push by the fast-food chain, easy sales comparisons in upcoming quarters, and the potential for P/E expansion. Tower and his team also like the longer-term setup on McDonald’s (NYSE:MCD) with multi-year growth drivers such as energy beverages, remodels, and accelerating unit growth all in play.
McDonald’s (MCD) is seen as having an advantage as it pressures fast-food peers with its more aggressive menu pricing. “They have not committed to anything beyond this, but we believe it could present a new construct that MCD could uniquely execute going forward,” wrote Tower. “Peers are seeing HSD (if not LDD declines) in traffic—levels not seen since peak GFC pain. It is hard to see how this doesn’t mean additional unit closures that further accelerate a negative franchisee feedback loop and leave significant dollars for MCD to vacuum up in the wake of closures,” he added.
Shares of McDonald’s (MCD) were up 0.7% in premarket trading to $305.25. The 52-week high for the restaurant stock is $326.32. The dividend yield for new buyers of MCD is 2.3%.