McDonald’s Stock Up after Stephens Upgrade



Stephens upgrade

Today, Stephens upgraded McDonald’s from “equal weight” to “overweight,” stating that lower expectations for McDonald’s in 2019 provided room for positive surprises, reported CNBC. Also, Stephens has set a 12-month price target of $200 on the stock, which represents an upside potential of 11.2% from its February 15 closing price of $179.97.

In a note to investors, Will Slabaugh of Stephens said, “We believe MCD’s core U.S. business is accelerating and set to show upside to consensus estimates for [first quarter 2019 and the full year].”

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Other analysts’ recommendations

Of the 30 analysts who follow McDonald’s, 80% say “buy” and the remaining 20% say “hold.” None of the analysts favor a “sell” recommendation. On average, analysts have set a price target of $197.67, which represents a return potential of 9.9% from MCD’s February 15 closing price.

Stock performance

The upgrade by Stephens appears to have increased investors’ confidence. McDonald’s was trading ~0.7% higher in the morning hours of trading today. Year-to-date, McDonald’s has returned 1.4% as of February 15. Peers Starbucks (SBUX), Wendy’s (WEN), and Jack in the Box (JACK) have returned 9.8%, 3.4%, and 15.3%, respectively. The broader comparative index, the Consumer Discretionary Select Sector SPDR ETF (XLY), has returned 11.2%.

McDonald’s posted its fourth-quarter earnings on January 30. You can read our analysis in Why McDonald’s Q4 Earnings Weren’t Impressive.


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