McDonald’s Corporation (NYSE:MCD) shares slipped Thursday as an analyst warned that its value-first push may fail to drive U.S. comp revisions or multiple expansion.
On Aug. 6, the fast food company reported second-quarter adjusted earnings per share of $3.19, beating the analyst consensus estimate of $3.14. Quarterly sales of $6.843 billion outpaced the Street view of $6.682 billion.
TD Cowen analyst Andrew M. Charles reiterated the Hold rating, raising the price forecast from $305 to $315.
McDonald's intensified focus on value won't drive positive U.S. sales revisions or justify multiple expansion, Charles wrote.
Charles cites weakened value perceptions and argues that reviving the marketing and menu innovations that succeeded from 2020–23 would be more profitable.
Until McDonald's delivers positive U.S. sales revisions, Charles does not expect its shares to earn multiple expansion.
Following the results, Charles maintained his second-half of 2025 U.S. comparable-sales estimate, noting McDonald’s is navigating a softer lower-income consumer backdrop.
The analyst raised the International comps forecast after the second-quarter outperformance, pointing to value initiatives and prudent pricing that resonated with customers.
Charles agrees U.S. comps are unlikely to miss over the next three quarters amid a 23× FY2 P/E valuation. However, he doesn’t expect enough upside to deliver material alpha.
Charles indicated that the next catalysts are third-quarter EPS in November and ongoing tracking of proprietary survey data to evaluate how effectively value initiatives are resonating.
Charles stated that, as a base-case assumption, he models U.S. comparable-sales growth of 1.7% in 2025.
Price Action: McDonald’s shares are trading lower by 0.85% to $305.03 at last check Thursday.
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