McDonald's (MCD) PT Lowered to $170 at RBC Capital; Weak Start to $1, $2, $3 Menu

RBC Capital lowered its price target on McDonald's (NYSE: MCD) to $170.00 (from $190.00) while maintaining an Outperform rating.

Analyst David Palmer lowers his US SSS expectations following a deterioration in industry conditions and some disappointing early sales impact from the $1, $2, $3 value menu. The analyst is cautious on the company in the NT but remains Outperform rated citing a belief that MCD has plenty of opportunities to correct itself and re-accelerate SSS growth in the coming quarters.

"We significantly lower our US SSS expectations due to deteriorating industry conditions and a disappointing early sales impact from the $1, $2, $3 menu," Palmer said. "Our 1Q18 US SSS growth estimate is now 1% (previously 3.5%), but we believe trends for the first two months of the year are roughly flat, with slightly negative sales in February."

The firm trims 2018 and 2019 EPS estimates from $7.60 and $8.46 to $7.43 and $8.17.

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