Analysts Continue to Trim McDonald’s (MCD) Price Targets – Is The Stock Attractive At This Level?

McDonald's Corporation (NYSE: MCD) has seen it's stock come under increasing pressure in recent months, with analysts cutting their outlook at increasing pace. In the shortened week of trading just gone, both KeyBanc and Guggenheim lowered their price targets on MCD.

Guggenheim trimmed their price target from $310 to $305, whilst keeping a “Neutral” rating in tact. Downward pressure on defensive stocks was one reason cited, alongside ‘tepid' U.S same store sales numbers.

Keybanc lowered its target from $340 to $325 while maintaining an “Overweight” rating, signalling continued confidence in the long-term prospects of the company, but acknowledging near-term pressures on growth. This adjustment reflects a growing consensus that the second quarter of 2025 was marked by intense competition within the hamburger fast-food sector, fueled by consumers increasingly focused on value in the face of persistent inflationary pressures.

KeyBanc's decision to trim its full-year same-store sales growth estimate for McDonald's U.S. from 1.7% to 1.1% underscores the impact of this competitive environment. The firm also revised its 2025 EPS estimate downward to $12.40 and its 2026 EPS estimate to $13.50.

These revisions, while modest, highlight the challenges McDonald's faces in sustaining its growth trajectory. Despite these challenges, KeyBanc believes that McDonald's likely outperformed its two largest U.S. rivals during the second quarter, suggesting that the company's strategies are proving more resilient than its competitors, albeit with less pronounced outperformance than initially anticipated.

While the stock has delivered a respectable 18.65% return over the past 12 months, momentum has stalled in recent months, with a 0.54% year-to-date gain, coming as MCD has pulled back more than 8% from recent highs.

The fast-food industry is currently embroiled in what analysts are calling a “value war.” McDonald's introduction of a $5 meal deal, featuring items like a McChicken or McDouble with fries and a drink, was a direct response to growing affordability concerns among consumers. This move, while aimed at maintaining market share, has prompted competitors like Wendy's, Burger King, and Jack in the Box to enhance their own value menus, escalating the competition and potentially squeezing profit margins across the board. This intense focus on value mirrors a similar trend observed in 2018, driven by inflationary pressures affecting consumer spending habits.

Although MCD has seen plenty of downward revisions in recent months, the consensus price target of $328.61 continues to reflect a perceived upside on the street of more than 10% from current levels. UBS indicated in a recent note that the pullback in the stock has already moved MCD to an attractive level, with their price target of $350 remaining unchanged. This echoes a previous note from Jefferies, also indicating the stock should be bought on pullbacks, with their target holding at $360.

While the company's strong brand, resilient performance, and dividend stability provide a solid foundation, the intense competition, consumer spending pressures, and slowing growth present significant hurdles. The upcoming Q2 2025 earnings report, expected in late July, will be a crucial litmus test for the company, providing markets with a clearer picture of McDonald's performance in this competitive environment.