Credit Suisse Notes Sluggish But Stable McDonald's (MCD) SSS After Checks
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Credit Suisse analyst Jason West notes McDonald's (NYSE: MCD) U.S. franchise checks suggests SSS are sluggish but stable.
West commented, "We have spoken with several MCD US franchisees recently to gauge sales trends in 3Q to-date. Recall that US system SSS slowed to +1.8% in 2Q from +5.4% in 1Q, driven in part by the broader industry slowdown. Our checks suggest that MCD's US SSS remained sluggish in July and August and are likely running in the +1-2% range, which we believe to be roughly in line with investor expectations. Looking ahead, MCD operators are looking forward to the relaunch of All-Day Breakfast (ADB) advertising in the coming weeks, though expect SSS to be ~flat to slightly down in 4Q due to difficult compares. Given the recent pullback in MCD shares, we believe investors are already pricing in a weak 4Q result for the US business. We're modeling 3Q US SSS at +1.5% (consensus = +1.3%) and 4Q at -2.0% (consensus = -0.5%)."
The firm maintained an Outperform rating and price target of $132.
Shares of McDonald's closed at $115.18 yesterday.
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