McDonald's
Corporation(NYSE:MCD) faced a downgrade by Lazard Capital Markets analyst,
Matthew DiFrisco on Monday, who felt that tough competition may obstruct sales
growth.
Matthew has cut his Buy
Rating on McDonald’s to Neutral since he is expecting a key sales figure will
shrink 1.8% in the last three months of 2012 with a sluggish start in the year
2013. The reduction at revenue at restaurants open at least a year, a crucial
measure of the health of a restaurant’s health, implies that McDonald’s is
losing share in the US whereas fast-food trends are gradually weakening in a
number of important global markets.
After years of
surpassing its competitors, McDonald’s has struggled lately with its long-time
competitors Wendy’s and Burger King, who have revamped their menus and
introduced new advertising campaigns. Meanwhile, new items on the menu boost
the sales growth of Taco Bell. Customers are increasingly visiting the fast-casual
food chains like Chipotle Mexican Grill and Panera that offer better quality
food at little expensive rates.
To rev up the sales
figures, CEO of McDonald’s, Don Thompson has revealed that the company will
focus on value by emphasizing on its Dollar Menu.
Matthew feels that the
abrupt termination of the head of McDonald’s US business operations earlier
this month has indicated that the company is planning on bringing bigger
changes, especially in terms of promotions.
Matthew has cut down
his per-shares profit prediction for the year 2013 from $5.95 to $5.74.
Earlier this month,
McDonald’s had reported lower demand and tougher competition for the poorer
sales. Even though the decline is legendary for the largest restaurant chain
the world, it was not unexpected. Analysts have been tempering expectations and
downgrading their stocks ratings since months.
David Tarantino of
Baird has maintained an Outperform rating on McDonald’s. He has said that Baird
is being cautiously positive that better trends can come out as McDonald’s
surpasses a wall of challenges in the upcoming months.
Shares of MCD are down
1.11% to $86.08.
macdonalds always gives me the runs, so i don't eat there or buy their stock.
ReplyDeleteMcDonalds has the best value. I bought food for wife and daughter at BK and it was $13.15! Really?
ReplyDeleteThat is why I don't go to BK as they are too expensive. Since Wendy's changed their fries we don't go there anymore as well. McDonalds has the best customer base due it being spread out among the three major consumer cultures. BK is not proportionate in their base is lop sided. Their base also has a much higher unemployment rate than base of McDonalds. My opionion. I know I'm not going to BK again anytime soon. Costs tooooo much.