UBS maintains McDonald's Buy rating, cites value meal boost

UBS analysts are maintaining their Buy rating on fast-food giant McDonald's (MCD), forecasting value meal discounts will drive sales for the chain in the second half of 2024. McDonald's shares are up in Friday's session, seeing a positive upswing since the middle of June.

Market Domination's Julie Hyman and Jared Blikre report on UBS Analyst Dennis Geiger's note on McDonald's.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This post was written by Luke Carberry Mogan.

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Video Transcript

Let's talk about mcdonald's U Bs coming out with a new note today on the fast food chain as the value meals, war value meal wars rage on U Bs breaking it down if it will translate to the traffic.

Mcdonald's is looking for and Dennis gear over U BS says, yes, he thinks that the company will see a boost.

He says for the next few quarters, there should be some pressure on same store sales trends, but then he says things will start to improve throughout 2024.

I also thought it was interesting.

He, he did say that the $5 meal deal which mcdonald's is about to kick off could drive a 200 basis point, same store sales lift.

He also says he expects it to become permanent right now.

Mcdonald's is just rolling out the value menu, the new value offerings on a sort of provisional basis, temporary basis.

But he says there should be a permanent value platform launching later in 2024.

I would say temporary until you get to the next level.

That used to be a dollar menu.

I guess the next step is what $25 105 dollars.

Just take a few more QE cycles.

Right.

In 2035 maybe we'll get there.

I do have, I did want to go to the wi I interactive real quickly here.

I have our Q that's fast casual and fast food heat map.

This is a year to date.

Look, and you're gonna see a lot of red here and let me sort by equal rate.

So you can see we got some clear winner, Chipotle Domino's Pizza Shake Shack.

That's 40% down to 20%.

But for the most part, oh, and young brands also in the green there.

But for the most part we're seeing a lot more red than green and some of these names are pretty big, not just mcdonald's, but Starbucks in there as well.