KeyBanc Reiterates Overweight Rating on McDonald's (MCD)

KeyBanc analyst Eric Gonzalez reiterated an Overweight rating and $335.00 price target on McDonald's (NYSE: MCD).

The analyst commented: "McDonald’s expectations have moderated; RBI’s topline appears solid. We continue to favor OW-rated McDonald’s and OW-rated Restaurant Brands International as both seem to be outperforming peers amid a challenging environment. We believe buyside expectations for McDonald’s U.S. have moderated to the 1.5-2% range, making the setup more reasonable with 4Q expected to be a much better result. Our recent industry conversations suggest baseline trends have improved modestly since the start of the Monopoly promotion.

Our price target on Overweight-rated MCD is based on two methods: 1) our peer group analysis of free cash flow generation; and 2) our DCF analysis, which yields a $335 value based on a terminal growth rate of 1.9% and a weighted average cost of capital of 6.6%. Our $335 price target equates to ~25x our 2026 EPS estimate of $13.50. MCD currently trades at ~23x forward earnings and the franchised fast food peer set trades at ~22x."

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 closed at $308.09 yesterday.

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