Wells Fargo lowers McDonald’s price target on franchisee deal concerns

Wells Fargo has lowered its price target for McDonald’s Corporation from $300 to $270, while keeping an Overweight rating on the stock. The adjustment follows concerns about the company’s pricing and value strategy, which Wells Fargo analyst Zachary Fadem described as still missing the mark amid stretched consumer budgets and increasing competition.

The investment bank also noted that McDonald’s NEXT initiative, a $8.5 billion, 10-year plan focused on technology, infrastructure, and menu improvements, may require a significant lift in unit volume to justify the investment. Wells Fargo expects the strategy to benefit franchisees more than shareholders, creating an overhang for the stock.

Earnings per share estimates for 2026 through 2028 were revised downward by Wells Fargo, with projections now at $12.75, $13.60, and $14.75 respectively. The firm anticipates NEXT-related headwinds to peak in fiscal 2030, impacting the company’s take rate and increasing depreciation and amortization costs.

McDonald’s stock has declined 24% year-to-date, contrasting with a 13% gain in the broader market. Other analysts, including Morgan Stanley, Bernstein SocGen Group, Baird, and BTIG, have also adjusted their outlooks, citing investment costs, consumer headwinds, and uncertainties surrounding the NEXT strategy.