McDonald's (MCD) PT Lowered to $288 at BofA Securities

BofA Securities analyst Gregory Francfort lowered the price target on McDonald's (NYSE: MCD) to $288.00 (from $302.00) while maintaining a Neutral rating.

The analyst commented: "1Q24 marked McDonald's lowest quarterly same store sales growth (SSSG) since the 1H20 COVID trough. Real time spending data suggests sluggish trends have persisted into 2Q. Some of the deceleration is a function of moderating price increases. But MCD's traffic is also lower (negative since 3Q23) and now lags peers. Burger King reported "flattish" US traffic in 1Q24 while Wendy's guided two-year stack (~8-9%) implies flat to positive 2QTD traffic. Given the advantages afforded MCD by its scale (advertising, COGS, tech), we believe the underperformance suggests a combination of difficult compares and missed execution. MCD's relative multiple sits at the low end of its recent historical range (1.1x the equal weighted S&P vs 1.2x 5-year average), but we expect limited multiple expansion as SSSG hew more closely to the US long term average (2-3%). We lower our PO to $288 (vs $302 prior) on the back of a lower market multiple. We maintain our Neutral rating."

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