McDonald’s shares advanced after the company reported better than expected first-quarter results and closed the week at $236,08.
Fundamental analysis: UBS raised its price target from $240 to $255
Even with the COVID-19 pandemic, this company’s business is going well, and McDonald’s reported better than expected first-quarter results last week. Total revenue has increased by 8.7% Y/Y to $5.12 billion, while the GAAP EPS for the first quarter was $2.05 (beats by $0.24).
Total revenue has increased above the expectations (+$80 million), and the company expects this trend to continue as we move into the post-pandemic recovery. Global comparable sales increased 7.5% during the quarter while the U.S. comparable sales rose 13.6%.
McDonald’s serves 10s of millions of customers each day, across almost 40,000 local restaurants, and since the pandemic began, the company leaned into this competitive advantage by continuing to improve drive-through service. McDonald’s is expected to achieve strong revenue and earnings growth in 2021, especially if the world gets rid of the COVID-19 pandemic.
UBS raised its price target from $240 to $255 on expectations that McDonald’s will continue to provide improvements in the upcoming quarters.
“We continue to like McDonald’s 2021 U.S. comp catalyst path, but also believe the brand is positioned for a multi-year period of sales outperformance. Structural improvements to marketing, digital, and updated store base, drive-thru efficiencies, and menu upgrades should provide ongoing share gain opportunities,” an analyst from UBS reported.
Evercore ISI raised its price target to $260 on McDonald’s as it sees this company well-positioned for a multi-year period of sales outperformance. McDonald’s is a stable company with a good position in the market, but the current risk/reward ratio is not good for value investors.
