Wells Fargo Backs McDonald's, Calls It A Key Defensive Stock — But Retail Turns Bearish

McDonald's shares are up 10% year to date vs a 10% decline in the benchmark S&P 500 index.

Wells Fargo reportedly named McDonald's (MCD) a key defensive stock in a market pressured by Donald Trump's policy changes and uncertain demand, sending the fast-food operator's shares up 3.4% on Tuesday.

Wells Fargo analyst Zachary Fadem said despite broader weakness throughout the fast food industry in recent months, McDonald's is among a handful of stocks that have "worked well", according to a CNBC report.

Its shares have gained over 10% this year when the benchmark S&P 500 (SPX) has declined by the same percentage point.

McDonald's value options are especially attractive to consumers eating out on a budget, and new menu items and promotions are expected to draw more customers, the analyst said.

Wells Fargo maintained its 'Overweight' rating and a $350 price target on the company's shares, which implies a nearly 10% upside from the last closing price.

Several analysts, including BofA, Evercore, and Barclays, have adjusted their targets on the shares in the last few days.

Currently, 24 of 38 analysts rate them 'Buy' or higher, with an average price target of $328.62, according to Koyfin data.

However, on Stocktwits, retail sentiment fell to 'bearish' from 'bullish' a day prior, while message volume dropped to 'low'.

A user said the company's earnings would be a catalyst.

McDonald's will report quarterly earnings on May 1.

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