McDonald’s slips to a four-month low amid concerns about traffic, comparable sales, and brand backlash

McDonald’s (NYSE:MCD) dipped 0.5% in late morning trading on Wednesday as the negative sentiment on the restaurant stock continued. Shares of McDonald’s (NYSE:MCD) are swapping hands at their lowest level since February amid concerns about traffic and consumer discretionary spending.

On Wall Street, Morgan Stanley said recently that McDonald’s (MCD) is a top quality business but hasn’t been, and probably will not be, insulated from some structural pressures on fast food. Meanwhile, Argus downgraded the restaurant stock due in part to its view that with customers pushing back against several years of price hikes, traffic will likely remain weak. The average price target on MCD from sell-side analysts is $328.75 (+13% upside).

Some analysts have also suggested that McDonald’s (MCD) could face backlash globally due to the policies of the Trump Administration. There are also some surveys showing McDonald’s (MCD) customers in the U.S. being dissatisfied about menu pricing.

Seeking Alpha analysts are even more cautious on McDonald’s (MCD) with a consensus Hold rating, while the Seeking Alpha Quant Rating is flashing Hold.

In terms of momentum, shares of McDonald’s (MCD) now trade below their 10-day, 50-day, 100-day, and 200-day moving averages, and the relative strength index is at a one-year low. Meanwhile, MCD’s year-to-date return ranks 24th in the restaurant sector out of 44 publicly traded names with a market cap of at least $50 million.

Looking ahead, a top priority of McDonald’s (MCD) this summer is to emphasize value offerings with customers. The centerpiece of the chain’s summer campaign is the $5 Meal Deal, which includes a choice of a McDouble or McChicken sandwich, small fries, a four-piece Chicken McNuggets, and a small soft drink, all for just five dollars. The deal is available at participating locations nationwide and is part of the broader McValue menu, which aims to provide affordable options for every meal of the day.

In addition to the $5 Meal Deal, McDonald’s has introduced the Buy One, Add One for $1 offer. With this promotion, customers can purchase a full-priced menu item from the McValue menu and add a second item for just one dollar. McDonald’s (MCD) also has a number of app-exclusive deals running as it aims to boost traffic.