McDonald's Stock At Attractive Valuation After Recent Drop, H2 Business Looks Strong: Analyst

UBS reiterated its 'Buy' rating on McDonald's and predicts a 21% upside to the stock price.

UBS Securities expects McDonald's (MCD) to show strong growth in the second half of the year and sees the recent dip in its stock as a compelling opportunity for accumulation.

Shares gained 2% to $291.55 on Friday and advanced some more in the after-market session after UBS reiterated its 'buy' rating. McDonald's shares have fallen nearly 9% since their recent high on May 19.

UBS set the price target on the shares to $350, indicating a 21% upside from Thursday's close.

According to the summary of the investor note on The Fly, UBS said it expects McDonald's sales to improve in H2, driven by new items like McCrispy Strips, Snack Wraps, $5 Meal Deals, and ‘Buy One, Add One for $1’ offers.

McDonald's, which is also expanding its global store count by 4%-5% annually and adding nighttime hours in some locations, is a "quality business" poised for multiyear market-share gains, forecasting high-single-digit earnings growth, UBS said.

Earlier this month, and before McDonald's shares weakened, Morgan Stanley downgraded them to 'Equal Weight' from 'Underweight,' citing high valuation.

On Stocktwits, the retail sentiment was 'bullish' as of late Sunday, unchanged from the previous week. McDonald's shares are up 0.6% year-to-date.

In recent news, the fast-food chain ended its partnership with Krispy Kreme (DNUT), which had allowed Krispy Kreme donuts to be sold at McDonald’s. The split was driven by disagreements over cost-sharing and had a greater impact on Krispy Kreme.

For updates and corrections, email newsroom[at]stocktwits[dot]com.<