McDonald’s downgraded because last year’s sales success is not the ‘norm’

Finance news

Investors shouldn’t get used to McDonald’s recent strong sales growth, according to Stephens Inc., which downgraded the stock to equal weight from overweight.

“Mid-single-digit comparable growth of recent quarters (especially in U.S.) was a result of successful initiatives coming together at once and should not be considered the norm,” analyst Will Slabaugh wrote Monday.

While consensus sees 2.9 percent same-store sales growth in 2018 – a key industry metric – Slabaugh argued that modest 2 percent growth is more realistic. He also cut his price target on McDonald’s to $170 from $185, implying 5 percent upside over the next 12 months.

Shares of McDonald’s fell 0.6 percent in premarket trading following the report. The shares are up 24 percent over the last 12 months.

In its latest quarterly financial report, the restaurant chain reported global same-store sales growing at its fastest pace in six years, climbing 5.5. percent in the final quarter of 2017; U.S. sales growth jumped 4.5 percent, beating consensus estimates.

The company is expected to report first-quarter earnings on April 30.

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