Goldman Sachs Gets More Cautious on McDonald's (MCD) After Q2 Results

July 23, 2012 3:56 PM EDT Send to a Friend
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Price: $95.68 +0.35%

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    4 Buy, 19 Hold, 1 Sell

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Analysts at Goldman Sachs commented on McDonald's (NYSE: MCD) after digesting this morning's earnings report. The firm said they are incrementally more concerned about current trends.

The firm cut its price target from $92 to $90 and lowered lower our 2012-2014 EPS estimates to $5.45/$5.97/$6.58 from $5.52/$6.03/$6.67.

Goldman's analyst said while they have "immense respect" for the company's business, its model and safety of the dividend, the company is at risk given current trends and the fact that 35-40% of profits come from Europe.

The are now more concerned following the results given: "(1) The company indicated that business was increasingly challenging in almost every region of the world, (2) inflationary pressures on labor and food costs are hurting corporate profitability, (3) forex continues to clip earnings and at current spot will persist as a headwind into 2013, (4) SG&A expenses are growing faster than sales, and (5) management ultimately indicated that it may not hit its long-term target of 6-7% forex-neutral operating profit growth this year, something not currently reflected in consensus expectations."

Goldman maintained their Neutral rating.

For an analyst ratings summary and ratings history on McDonald's click here. For more ratings news on McDonald's click here.

Shares of McDonald's are down 2.7 percent to $89.11.




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