McDonald's seen getting a Q4 boost from same store sales, analysts say

By Liz Moyer

Investing.com -- McDonald’s Corporation (NYSE:MCD) is entering 2023 on a strong note, with a renewed emphasis on its core products and building its capabilities in digital services, drive-thru and delivery, something that makes it a top pick in the restaurant category, according to Oppenheimer analysts.

The research firm is forecasting a healthy same store sales number when the fast food giant reports earnings next week. It is also forecasting a better-than-expected earnings per share number for the quarter, estimating $2.54 a share, which is above the average Wall Street estimate of $2.45.

“The company’s unmatched scale and operational resilience has created strong global momentum, particularly in U.S., where traffic is positive,” the analysts wrote in a note. “We believe MCD is positioned to win regardless of the economic situation.”

They noted that in the 2008-2009 recession, Mcdonald's was the only public restaurant company to show positive earnings revisions throughout the downturn.

Shares of Mcdonald's rose 0.5% on Wednesday and are up 2.7% for this year and 8% over the past 12 months. Oppenheimer rates the stock an outperform with a price target of $304, implying a 12% upside from current trading levels.

McDonald’s latest strategy, which it is calling “Accelerating the Arches 2.0” puts a focus on marketing, core products and an emphasis on delivery, digital, drive-thru and development, including ways to improve its classic menu selections such as the Big Mac and the Chicken McNugget.

The strategy “represents an under-appreciated catalyst to elevate unit growth and enhance operating margins,” Oppenheimer wrote in a note on Wednesday.

For the fourth quarter, Oppenheimer forecasts an 8.5% jump in same store sales, versus the Street consensus of 8.1%.

The firm is also modeling earnings for 2023 in excess of the Street consensus, at $10.73 a share versus the average analyst estimate of $10.59 a share.