McDonald’s Corp, the largest restaurant chain in the world by sales and the leading burger fast-food chain, is expected to report its fourth-quarter earnings of $2.32 per share, which represents year-over-year growth of over 36% from $1.70 per share seen in the same period a year ago.
The leading global foodservice retailer would post revenue growth of over 13% to around $6.04 billion.
McDonald’s stock closed 0.57% higher at $254.57 on Friday. The stock slumped over 5% so far this year after surging nearly 25% in 2021.
“We maintain our Buy rating and $295 price target on McDonald’s ahead of 4Q21 results this Thursday. While we are modelling double-digit global same-store sales (11.2%) this quarter, including mid-single-digit (6.5%) domestic comps, we believe investors could be surprised to hear of a planned unit growth acceleration in the U.S., moving to low-single-digits growth from declines over the past seven years,” noted Peter Saleh, equity analyst at BTIG.
“Additionally, we believe the adoption of automation technology could be a major theme this year given the labour environment and will be listening for progress on McDonald’s voice ordering technology, Apprente.”
McDonald’s Stock Price Forecast
Twenty-seven analysts who offered stock ratings for McDonald’s in the last three months forecast the average price in 12 months of $283.88 with a high forecast of $314.00 and a low forecast of $260.00.
The average price target represents an 11.50% change from the last price of $254.59. From those 27 analysts, 22 rated “Buy”, five rated “Hold” while none rated “Sell”, according to Tipranks.
Morgan Stanley gave the base target price of $294 with a high of $342 under a bull scenario and $201 under the worst-case scenario. The investment bank gave an “Overweight” rating on the restaurant chain’s stock.
“Best-in-class asset quality, scale in advertising, other areas = structural advantages. Experience of Future (EOTF) reimages enable digital and delivery sales, key to the new strategic plan. ROIC rising and FCF and return of capital to accelerate post ’19, after accounting for Covid-19 disruption,” noted John Glass, equity analyst at Morgan Stanley.
“Refranchising to 95% mostly complete, with operating margins in the mid-40% range, improved FCF and lower earnings volatility. Defensive stock, both in terms of fundamentals and low stock price volatility; better positioned for uncertain demand environment.”
Several other analysts have also updated their stock outlook. Guggenheim raised the target price to $295 from $275. UBS lifted the target price to $297 from $270. Piper Sandler increased the rating to overweight from neutral and upped the target price to $282 from $232. BTIG raised the target price to $295 from $255.
Technical analysis also suggests it is good to buy as 100-day Moving Average and 100-200-day MACD Oscillator shows a buying opportunity.
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