Morgan Stanley Downgrades McDonald's On Macroeconomic Pressures, High Valuation

McDonald's shares fell 1% after the analyst action.

Morgan Stanley downgraded its rating on McDonald's (MCD) shares to 'Equal Weight' from 'Underweight' on Monday, dragging the stock down nearly 1%.

The investment bank said that while McDonald's is outperforming its peers, it may "not be insulated from some structural pressures on fast food," according to the investor note shared on The Fly.

High inflation combined with an erratic trade policy from President Donald Trump is straining consumer spending. The effects are already being seen in retail businesses, restaurant chains, fashion brands, and other sectors.

Morgan Stanley said McDonald's stock trades at 25 times its earnings and is now priced at a fair value. “Near-term comp trajectory should be better… though we see this is as well appreciated,” the note said.

The investment bank cut its price target on MCD to $324 from $329, signaling an 8% upside.

McDonald's stock has climbed about 6% year-to-date, ending Monday's session at $304.78.

On Stocktwits, the retail sentiment for the company was 'bearish,' unchanged from a month ago.

Several users reacted to the downgrade, with one noting the stock now offers an attractive entry point for buyers.

Last month, the burger chain reported first-quarter earnings in line with expectations; however, revenue fell short of expectations, and U.S. same-store sales experienced their steepest decline in five years.

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