McDonald's Corporation (NYSE:MCD) picked up a pair of price forecast cuts on Monday as analysts chewed over softer U.S. sales trends, heavier investment and execution risks tied to the restaurant giant's value strategy.
Wells Fargo analyst Zachary Fadem kept an Overweight rating but lowered his price forecast from $300 to $270. Guggenheim analyst Gregory Francfort stayed Neutral and cut his price forecast from $290 to $250.
Francfort also trimmed his earnings estimates, pointing to weaker-than-expected U.S. same-store sales, slower global unit growth and higher capital reinvestment.
His revised outlook does bake in stronger same-store sales growth over the next several years as those investments start generating returns. It also incorporates McDonald's plan to refranchise 60% of its existing company-operated restaurant portfolio and changes to how the company supports franchisees.
Francfort now expects adjusted EPS of $13.50 in 2027 and $14.35 in 2028, below consensus estimates of $13.88 and $14.77, respectively.
Guggenheim said McDonald's continues to benefit from unmatched U.S. scale, powerful marketing and digital capabilities and a highly profitable franchise model. Still, the firm wants clearer evidence that franchisees are aligned behind the company's value initiatives and operational improvements before getting more constructive on the stock.
Earnings Outlook
McDonald's next major scheduled catalyst is its third-quarter earnings report, currently estimated for Nov. 4, 2026.
Analysts expect EPS of $3.39, up from $3.22 a year earlier. Revenue is projected at $7.30 billion, compared with $7.08 billion in the year-ago quarter.
Investors will likely focus on U.S. comparable sales, customer traffic, franchisee economics and whether McDonald's value initiatives are gaining enough traction to offset continued pressure on lower-income consumers.
McDonald's Faces AI Pricing Lawsuit
Separately, McDonald's is facing a proposed nationwide class-action lawsuit alleging it illegally coordinated menu prices across franchise and company-owned restaurants using an AI-powered pricing system, Reuters reported.
The lawsuit, filed Friday in federal court in Chicago, alleges McDonald's violated U.S. antitrust law by using algorithms trained on nonpublic data to help coordinate prices with independent franchisees.
McDonald's denied the allegations Monday, calling them speculative and uninformed. The company said AI does not set or change menu prices and that franchisees make their own pricing decisions.
The Illinois plaintiff is seeking to represent a class that could include millions of McDonald's customers, according to Reuters.
MCD Price Action: McDonald's shares were up 0.39% at $233.94 during premarket trading on Tuesday. The stock is near its 52-week low of $229.20, according to market data.
