Fast-food giant McDonald’s (MCD) has not seen as much success on Wall Street over the past 12 months as it has in the past. The fast-food chain has faced some hurdles, such as an expired meat scandal in China and trouble appealing to younger customers. In November, the company posted a 4.6% decrease in sales in stores open for more than one year.
McDonald’s has come up with a few ideas to turn things around, including streamlining its menu so it is less overwhelming to customers and to decrease preparation time; lowering the number of ingredients in its products to make them more appealing to the health conscious consumer; and introducing the “Create Your Taste” program, which will be implemented in 2,000 American locations this year.
In the company’s latest quarterly report, McDonald’s announced that CEO Don Thompson will be stepping down from his position, as he struggled to revive the company's domestic sales. President of McDonald’s Europe, Steve Easterbrook, was chosen to take over as CEO of the company starting March 1st. Investors are hoping that the new McDonald’s CEO will be able to increase the company’s sales.
On March 4, RBC Capital analyst David Palmer upgraded his rating on McDonald’s from Sector Perform to Outperform. He noted, “We think that McDonalds can win with fun and value and convenience, if they close that quality gap versus their key competitors.” With that said, Palmer believes McDonald’s same-store sales growth will turn around by the end of this year and it should start seeing an "outsized" profit increase in the second half of 2015.
Palmer has an overall success rate of 76% recommending stocks and a +13.0% average return per recommendation. He has rated McDonald’s 9 times since January 2010, earning a 71% success rate recommending the company and a +11.1% average return per MCD recommendation.
On the other hand, Janney analyst Mark Kalinowski maintained a Neutral rating on McDonald’s on March 4th with an $89 price target, citing slowing US sales growth in February. The analyst also commented on the new McDonald’s CEO, stating “Any time you have an incoming CEO, that can be a catalyst for change… In McDonald's history, that's mostly been positive change.”
Overall, Kalinowski has an 89% success rate recommending stocks and a +15.0% average return per recommendation. He has rated McDonald’s 20 times since April 2010, earning a 100% success rate recommending the fast-food giant and a +10.7% average return per MCD recommendation.
Overall, the top analyst consensus for McDonald’s on TipRanks is Hold.
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