Analyst rework McDonald’s stock price target ahead of earnings

This will wipe the smile right off your Happy Meal.

Anyone looking at the current state of the stock market is probably going to lose their appetite, as President Donald Trump’s sweeping reciprocal tariffs hit the world right where it hurts.

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Stocks have nosedived following the “Liberation Day” announcement, producing the kind of numbers that put the “A” in agita.

Nevertheless, Trump has vowed to stay the course on his tariff plan, saying in an April 4 social media post that “MY POLICIES WILL NEVER CHANGE.” 

The levies are hitting just about every industry you can shake a ladle at, including the food sector.

The Consumer Brands Association, a food industry trade group, said its member companies largely supported “America First” and many manufacture in rural parts of the U.S., according to CNBC. But their supply chains are global, “incredibly tapped out, ”and with any cost hikes “there is nowhere to absorb it.”

“As prominent U.S. manufacturers, we adamantly endorse strong trade enforcement and protection mechanisms,” Melissa Hockstad, the association’s president and CEO, said in a letter to Trump last month.

“Our hope is that the current one-size-fits-all approach for protecting domestic manufacturers can be adjusted to reflect supply-chain constraints, informed by commodity and import data,” she added.

McDonald’s CEO Chris Kempczinski stressed the importance of low-income consumers.

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McDonald’s CEO cites strong value program

Michelle Korsmo, chief executive of the National Restaurant Association, said the reciprocal levies could disrupt the industry by hiking food and packaging costs, which operators will have to pass on to consumers in higher prices, CBS News reported.

Americans like their fast food, with nearly 37% of adults consuming the stuff on any given day. 

Younger adults and men are more likely to frequently eat fast food, and people who earn more money tend to eat more of it than those in lower income brackets.

Which brings up McDonald’s  (MCD) , one the world’s largest fast-food restaurant chains.

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McDonald’s President and CEO Chris Kempczinski said during the company’s fourth-quarter earnings call in February that “that the low-income consumer is overweighted in the industry relative to the U.S.”

“I think that’s the landscape that we’re looking to navigate through,” he told analysts. “It’s why we — it’s so important that we make sure that we have a strong value program, which is the focus in Q1 in getting McValue launched.”

Launched in January, the McValue “platform provides consistent, compelling value, with the choice and flexibility our customers want,” Kempczinski said.

Although McDonald’s’ quarterly earnings met expectations, revenue fell short of Wall Street’s estimates. U.S. same-store sales — benchmarking outlets open at least a year, a key metric for assessing restaurant performance — declined as customers spent less at its restaurants.

Analyst notes still-challenged consumer

Ian Frederick Borden, MCD’s chief financial officer, said “there are varying levels of near-term headwinds across markets.” 

“Our approach to our 2025 outlook reflects the current environment of softer, declining restaurant industry traffic in the U.S.,” he said. 

Shares of McDonald’s are up nearly 14% from a year ago. They were down 5% at last check. The company is scheduled to report fiscal-Q1 results on May 1.

Citi analyst Jon Tower recently addressed the issue of the low-income consumers and the Golden Arches in a research note.

Tower pared the firm’s price target on McDonald’s to $353 from $360 and affirmed a buy rating on the shares as part of a first-quarter earnings preview. 

The company’s Q1 global comparatives likely came in in worse than expected as weather, a “still-challenged” low-income consumer, and limited new-product news during the period weighed on growth, the analyst said.

Related: McDonald’s CEO sounds the alarm on fast-food sales

However, Tower said this would mark a low point for the year as the brand brings new products to menus and laps softer comparisons over the rest of 2025. 

The analyst says McDonald’s “remains on the right side of the uncertainty/tariff trade.”

Last month, KeyBanc analyst Eric Gonzalez boosted the firm’s price target on McDonald’s to $340 from $335 and kept an overweight rating on the shares. 

By most accounts, Q1 is proving to be a difficult one for the fast-food industry, Gonzalez said. 

That said, Q2 2025 is shaping up to be an important one, with several initiatives poised to drive share gains and potentially reinvigorate momentum, he added. 

Based on its industry conversations and proprietary data, Gonzalez said, he was lowering his Q1 same-store-sales growth estimate for McDonald’s USA, but he’s raising his Q2 estimate to 3.5% to reflect optimism around the innovation/marketing calendar.

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