McDonald’s Gets A Price Target Cut At Guggenheim Over Tepid US Sales: Retail Sentiment Remains Bullish

Guggenheim on Tuesday lowered its price target on fast-food chain McDonald's to $305 from $310, as demand for its burgers and fries remains tepid, mainly in the United States, with macroeconomic uncertainty weighing on consumer purchase decisions.

Analyst Gregory Francfort maintained a Neutral rating on the shares, according to The Fly. Francfort added that the stock is not yet compelling enough to warrant an upgrade amid tepid U.S. same-store sales, coupled with downward pressure on defensive stock valuations.

McDonald's shares were marginally higher on Tuesday. The stock has risen 1% year-to-date.

In May, McDonald's CEO Chris Kempczinski cited harsh market conditions, resulting in a double-digit year-on-year decline in visits from lower- and middle-income customers.

Francfort, however, added that the skew in McDonald's is starting to shift to the upside rather than the downside.

On Friday, UBS Securities set a price target for McDonald's at $350, indicating a 21% upside from Thursday's close. The brokerage expects McDonald's to show strong growth in the second half of the year.

Stocktwits data shows retail sentiment over the past week on McDonald's has been 'bullish'.

Last week, McDonald's and doughnut chain Krispy Kreme announced that they would end their partnership effective this week. Krispy Kreme CEO Josh Charlesworth called the partnership "unsustainable" for the doughnut company, as it was unable to bring costs in line with unit demand.

McDonald's USA's Chief Marketing and Customer Experience Officer, Alyssa Buetikofer, said the partnership met the burger chain's expectations but also needed to be a profitable business model for Krispy Kreme.

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