Argus downgrades McDonald's as price hikes hit traffic
Analyst cuts 2025 earnings estimate to $12.30 a share from $13.20, warning that McDonald's core lower-income customer base is pushing back after a period of repeated price hikes. The stock is trading at 24.6 times his revised 2025 forecast, a premium to peers Darden Restaurants (NYSE:DRI) and Restaurant Brands International (NYSE:QSR), which trade at lower multiples.
While McDonald's has outperformed broader restaurant peers so far this year, Argus sees limited near-term upside. Same-store sales in the U.S. fell 3.6% in the first quarter, more than double the decline analysts had expected. Global same-store sales also missed expectations, reflecting weaker demand in key markets such as the U.K.
Analyst noted that international sales were mixed, with strength in the Middle East and Japan partly offsetting softness elsewhere. Operating income declined to $2.65 billion from $2.74 billion a year earlier.
Despite the downgrade, Argus sees McDonald's international reach, consistent dividend growth, and share buybacks as positives for long-term investors. The firm now expects 2026 earnings of $13.30 a share, down from a prior estimate of $13.80, and cut its long-term growth forecast to 8% from 10%.
McDonald's shares are up 4.3% so far this year. The company plans to continue focusing on value offerings, including a $5 meal deal, and is set to relaunch its snack wraps later this year.
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