McDonald’s shares are likely to bounce as the fast-food chain makes moves to notch stronger sales in the U.S. and abroad despite ongoing macroeconomic pressures, according to UBS. The bank has a buy rating on the burger joint. It maintained a $365 price target on shares, implying 27% upside from Friday’s close. “Risk/reward for MCD shares is attractive despite near-term pressures, given catalysts with potential to drive market share gains & strengthen US sales growth, and defensive characteristics that should provide earnings stability in a still volatile environment,” UBS analyst Dennis Geiger said Monday in a note to clients. Shares of the Golden Arches have retreated 11% in the past three months, underperforming the overall market, as investors have weighed the potential impacts of the Iran war on McDonald’s businesses in the U.S., Europe and other regions. Investors that spoke to UBS are forecasting U.S. and international operated markets same-store sales to come in between roughly 3% and 3.5% for the first quarter versus the 4% and 3.8% expected by analysts polled by FactSet, respectively. MCD 3M mountain McDonald’s stock has declined 11% over the past three months. McDonald’s is slated to report its first-quarter earnings results on May 7. “Our discussions suggest negative investor sentiment, likely reflecting concerns around slowing US sales trends [second quarter to date], difficult US comparisons in [the second half of the year], and potential impacts from the Middle East conflict in Europe and globally,” Geiger wrote. “But we believe the brand remains well positioned globally and maintains important initiatives to strengthen trends.” McDonald’s has made several marketing and product changes, including the launch of its more wallet-friendly McValue 2.0 menu in April, which are likely to “further resonate with customers” in key markets, according to UBS. The analyst also pointed to McDonald’s new beverage platform and its menu collaboration with the popular Netflix series KPop Demon Hunters as near-term catalysts for the stock. “Solid execution on key sales plans will continue, w/value, marketing and menu innovation likely to further resonate globally with customers, including in the US,” Geiger wrote. UBS’ call falls in line with consensus on the Street. Of the 38 analysts covering McDonald’s, 21 have a buy or strong buy rating on the stock, LSEG data shows.
