McDonald’s on the Street: What the Analysts Think ahead of the IQ17 Results
As of April 19, 2017, McDonald’s (MCD) was trading at $132.64. McDonald’s stock price might have factored in all the estimates we’ve discussed in the previous articles of this series, however (see parts 1–5). In this final part of our series, we’ll look at the analysts’ price targets for next 12 months as well as their recommendations.
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MCD’s initiatives to improve McDonald’s same-store sales growth and its expansion plans in China and Hong Kong appear to have prompted analysts to raise their price targets for next 12 months.
As of April 19, 2017, analysts on average are expecting McDonald’s stock price to touch $135.7 over the next 12 months, which represents a return potential of 2.3%. Before its 4Q16 earnings, analysts had forecasted a price target of $128.1 for the stock.
The return potentials of McDonald’s peers over the next 12 months are as follows:
- Jack in the Box (JACK): target price of $115.2, with a return potential of 16.9%
- Restaurant Brands International (QSR): target price of $54.58, implying a fall of 2.9% from its current price
- Wendy’s (WEN): target price of $14.24, with a return potential of 4.0%
Of the 31 analysts that follow McDonald’s, 54.8% are recommending a “buy,” while 45.2% are recommending a “hold.” None of the analysts are recommending a “sell.” Recently, Bernstein Research and Wells Fargo upgraded McDonald’s from “market perform” to “outperform.”
Remember, McDonald’s stock will move in tandem with analysts’ recommendations. As analysts raise their price targets, the stock should rise, and vice versa. Also, a target price higher than a current price does not mean an automatic “buy,” and investors have to carefully analyze the various factors that we’ve covered in this series before making investment decisions.
In the meantime, keep checking in with Market Realist’s Restaurants page.