Evercore: McDonald’s (NYSE:MCD) Is Set for a Comeback

After struggling with higher prices and losing market share in the post-COVID era, fast-food chain McDonald’s (MCD) is set for a comeback in the latter half of 2024 and into 2025, according to Evercore ISI, which raised its price target from $300 to $320 and increased same-store sales estimates. As a result, shares rose by more than 3% in today’s trading.

Led by five-star analyst David Palmer, Evercore reaffirmed its Outperform rating on McDonald’s and cited recent improvements in market share trends and the successful launch of commemorative cups as signs of the brand’s resilience and a shift away from its poor value perception. The analyst now predicts same-store sales growth for Q3 to be flat year-over-year, up from an earlier estimate of a 1% decline, and expects 2025 sales growth to rise by 3%, up from his initial 2% growth estimate.

To regain its value perception, McDonald’s needs to focus on advertised value tiers and moderate price increases while expanding menu options in growth areas like chicken and beverages. Evercore also emphasized the importance of supporting these efforts with speedier service and innovative menu items to drive faster growth in key segments. The introduction of low-priced beverages, similar to the successful $1 any-size beverage deal in 2017, could be a significant traffic booster.

It’s worth noting that, so far, Palmer has enjoyed an 86% success rate on MCD stock, with an average return of 14.87% per rating.

Is McDonald’s a Buy, Sell, or Hold?

Turning to Wall Street, analysts have a Moderate Buy consensus rating on MCD stock based on 16 Buys, seven Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. After a 5% rally in its share price over the past year, the average MCD price target of $293.14 per share implies 1.94% upside potential.

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