McDonald's (MCD) U.S. SSS Outlook Cut to 'Street Low' at Nomura Following Survey; PT to $122
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Nomura Securities lowered estimates and its price target on Neutral-rated McDonald's (NYSE: MCD) to $122.00 (from $129.00) following its Franchisee Survey. The firm's Q3 U.S. SSS forecast of 0.2% is a Street-low.
Analyst Mark Kalinowski commented, "Based on the results from our McDonald’s Franchisee Survey, we lower our U.S. same-store sales forecast by 160bp to +0.2% (110bp below consensus) which is the new low forecast on the sell-side according to Consensus Metrix data. In addition, we take down our Q4 same-store sales forecast by 100bp to -2.0% (140bp below consensus). These moves result in us reducing our Q3 and Q4 EPS estimates by -$0.02 each, to $1.47 and $1.40, respectively. Our full-year 2016E EPS projection is lowered by -$0.04, to $5.55. Given this lower base of anticipated earnings coming off of this year, and weak domestic samestore sales momentum, we also take down our full-year 2017E EPS forecast by -$0.09, to $6.10. Reflecting the unattractive U.S. sales trends and outlook, we lower our target multiple on MCD to 20x (from 21x). This has the effect of reducing our target price on MCD to $122 (from $129). We maintain our Neutral rating on MCD."
Shares of McDonald's closed at $114.09 yesterday.
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