McDonald’s stock price forecast: fast food chain is ‘firing on all cylinders’

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on Sep 7, 2023
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  • Wells Fargo upgraded McDonald's Corp to "overweight" on Thursday.
  • Analyst Zachary Fadem explained his bullish view in a research note today.
  • McDonald's stock has lost about 7.0% in less than two months.

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McDonald’s Corp (NYSE: MCD) has been a disappointment for shareholders in recent months but a Wells Fargo analyst says a full recovery is brewing.

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McDonald’s stock has upside to $310

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Zachary Fadem upgraded the chain of fast-food restaurants this morning to “overweight” and raised his price target as well to $310 which suggests a 13% upside on its previous close.

The analyst likes McDonald’s stock because he’s convinced it can do well even amidst a wider slowdown in quick-service restaurants. His research note reads:

Despite well-telegraphed deceleration, we see upside to 2H [as its] innovation engine is firing on all cylinders.

In July, the fast food chain reported its financial results for the second quarter that handily topped Street estimates partly due to a rebound in China as Invezz reported here.

McDonald’s could see its margins improve

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Fadem expects the Chicago-headquartered firm to report unit acceleration at more than 4.0% in fiscal 2024 – a positive for its premium valuation.

Other reasons cited for the bullish view on McDonald’s stock include easing margin pressures, sales momentum, and strength in international markets.

We believe McDonald’s is just getting started. It’s an opportunity to own a best-in-class operator heading into a new unit acceleration cycle.

The Wells Fargo analyst praised the company’s marketing as well that he believes will continue to help boost sales moving forward. Note that MCD currently pays a dividend yield of 2.18% that makes up another great reasons to invest in it.

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