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Analysts Revised the Price Target after McDonald’s Earnings

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Dec. 4 2020, Updated 10:51 a.m. ET

Analysts’ estimates

Since McDonald’s (MCD) beat market expectations in 4Q15, the company’s share prices rose to $119.2. Now, with a more recent update available on McDonald’s future plans, analysts revised the price target on McDonald’s for the next 12 months.

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Price target

As of January 27, Wall Street analysts set a price target of $125.1 for the next 12 months with a return potential of 5% from the closing price of $119.2 on January 25. On the higher side, Mark D. Kalinowski of Namura predicted that it will touch $138. On the lower side, Ben Parente from Telsey Advisory Group predicted that it will touch $97.

In his report, Kalinowski wrote that “Our channel checks suggest that in the short term, McDonald’s has regained at least some of its mojo — and impressively, it has done so at a time in which most major segments of the domestic restaurant industry are enduring sequential deceleration in same-store sales trends.”

Analysts’ recommendations

According to a Bloomberg consensus that surveyed 32 analysts, 43.8% have a “buy” recommendation, 50% have a “hold” recommendation, and 6.2% have a “sell” recommendation for the stock. McDonald’s share prices move in tandem with analysts’ recommendations. Since analysts raised their target price for the next 12 months, the stocks share prices will also increase and vice versa.

With the share price being traded at a lower price than the target price, it doesn’t mean an automatic “buy.” Investors have to carefully analyze various matrices that we discussed earlier before investing.

You can gain exposure to McDonald’s by investing in ETFs like the iShares U.S. Consumer Services ETF (IYC). IYC invests more than 4% of its portfolio in McDonald’s. It also has holdings in Starbucks (SBUX), Yum! Brands (YUM), and Chipotle Mexican Grill (CMG).

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