McDonald’s on the Street: Analyst Recommendations ahead of the 4Q17 Earnings



Target price

As of January 22, 2018, McDonald’s (MCD) was trading at $176.21. On the same day, analysts were expecting the company’s stock price to reach $186.07 in the next 12 months, which represents a return potential of 5.6%.

On January 16, 2018, Barclays raised its target price for MCD from $193 to $205. Previously, Cowen and Company had raised its target price from $185 to $200, while Nomura had increased its target price for MCD from $180 to $190.

The measurements adopted by MCD’s management and the expectation of a decline in the corporate tax rate could have prompted analysts to raise their target prices.

The target price and the return potential of McDonald’s peers are as follows:

  • Wendy’s (WEN): $17.61, with a return potential of 4.8%
  • Jack in the Box (JACK): $109.93, with return potential of 15.7%
  • Restaurant Brands International (QSR): 72.33, with return potential of 18.2%
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Analyst ratings

Of the 35 analysts tracking McDonald’s stock, 71.4% recommend a “buy,” and 28.6% recommend a “hold.” None of the analysts recommends a “sell.”

Remember, McDonald’s stock price will tend to move in tandem with its analysts’ ratings. When analysts raise their target prices, the stock price of the company generally moves up, and vice versa.

McDonald’s is now trading below the analysts’ target price, but this doesn’t mean an automatic “buy.” Investors are advised to study the various analysts’ estimates discussed in this series before making any investment decisions.


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