UBS Lowers McDonald's Price Target Amid Sales Challenges

UBS has lowered its price target on McDonald's Corp.'s shares to $320 from $340 while maintaining a Buy rating. The firm cited pressured quick-service restaurant valuations and US sales challenges as reasons for the reduced price target.

McDonald's shares currently trade at $248.24, near their 52-week low of $247.65, according to InvestingPro analysis. The stock appears undervalued relative to its Fair Value, with a valuation multiple of approximately 18 times consensus 2027 earnings estimates, which is at the lower end of historical ranges.

UBS analyst Dennis Geiger noted that McDonald's will hold an investor day on September 23 in Chicago. During this event, the company is expected to outline its plans to improve US sales performance and details on its NEXT growth strategy, which focuses on four key pillars: menu, consumer, restaurant, and people.

UBS expects McDonald's to address global unit growth expectations beyond its current target of approximately 50,000 stores globally by 2028. The company is also expected to discuss US restaurant remodel plans, including incremental capital expenditure support levels. UBS anticipates that the company will provide less financial support for remodels compared to the previous Experience of the Future cycle.