CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:
We lower our 12-month target price to $290 from $332, 23.6x our 2024 EPS, a discount to MCD’s five-year average forward P/E of 26.9x, justified by the risk of worsening traffic trends. We raise our 2023 EPS estimate to $11.73 from $11.57 and 2024’s to $12.29 from $12.06. MCD posts Q3 adj-EPS of $3.19, $0.20 above consensus. Revenue of $6,692M (+14.0% Y/Y) was $142M above consensus. Adj-operating income grew to $3,234M, with margin widening 130 bps to 48.3% vs. 46.9% consensus. Comp sales rose 8.8% vs. 8.0% consensus, mainly due to higher menu prices. However, topline growth is moderating largely due to falling inflation and cost of living pressures. We note a drop in traffic among low-income consumers, more promotional activity in the QSR industry, and pressure on the breakfast daypart from the return-to-office trend. Despite these factors, we’re still positive on MCD due to its focus on value, marketing, and digital scale, coupled with the potential for further market share gains and consumer trade down.