McDonald's Stock Rebounds From Fresh 52-Week Low as Wall Street Cuts Targets After Investor Day Selloff

CHICAGO — Shares of McDonald's edged higher Tuesday after touching a fresh 52-week low early in the session, as the fast-food giant's stock struggles to recover from a steep selloff that has put it on course for its worst year in more than two decades.

McDonald's stock was trading at $234.99 as of 11:29 a.m. EDT, up $1.44, or 0.61%, from Monday's close of $233.55. The shares fell as low as $233.23 earlier in the day, a new 52-week low, before recovering.

Even with Tuesday's modest gain, the stock remains far below its 52-week high of $341.75. The shares are down nearly 31% from their February peak and on track for their worst annual return since 2002, according to Bloomberg.

Analysts trim targets

The stock's weakness has prompted a wave of price target cuts from Wall Street analysts in the days since McDonald's held its investor day on Sept. 23.

Melius Research lowered its price target to $230 from $250, while Morgan Stanley cut its target to $297 from $308 and kept an equal-weight rating. Baird reduced its target to $250 from $285, and Oppenheimer lowered its target to $295 from $325.

Despite the cuts, most analysts remain positive on the stock over the longer term. According to Investing.com, 19 analysts rate McDonald's a buy and one recommends selling, with an average 12-month price target of about $299, well above the current share price.

Investor day disappoints

McDonald's shares slid to a fresh low on Sept. 23 as management laid out its long-term strategy at its first investor day in several years.

The company outlined a major push to modernize its restaurants and use artificial intelligence, including voice AI tools for drive-thru ordering, along with updated menu options designed to boost U.S. sales. It paired the plan with an $8.5 billion support package for franchisees through 2036 and set a goal of reaching operating margins in the low-to-mid 50% range by 2030.

But investors focused on the company's cautious view of the consumer environment. CEO Chris Kempczinski signaled that high inflation and flat restaurant traffic are likely to persist, according to 24/7 Wall St. The franchisee support commitment also raised concerns that it would reduce the parent company's cash flow before any efficiency gains take hold.

McDonald's has said traffic from low-income customers has fallen sharply over the past two years, weighing on U.S. sales as budget-conscious diners cut back on eating out.

Value struggles

The company faces a central challenge: winning back cost-conscious customers who believe its menu has become too expensive.

McDonald's has leaned heavily on value offerings, including a reset of its value menu, to draw diners back, but analysts have cited execution concerns. In the second quarter, U.S. comparable sales rose just 0.8%, while global comparable sales increased 1.3%.

Management attributed much of the second-quarter shortfall to problems executing its value strategy, along with a weak marketing campaign tied to the FIFA World Cup.

"We don't have a strategy problem. We simply didn't execute at the level we needed to in the second quarter," Kempczinski told analysts after the results.

The company's chief financial officer pledged that McDonald's would not be beaten on value, amid concerns about inconsistent pricing across restaurants.

McDonald's also delayed its target of reaching 50,000 restaurants worldwide to 2028 from 2027.

Solid profits, slower growth

Despite the slowdown in sales growth, McDonald's remains highly profitable. The company reported second-quarter revenue of about $7.1 billion, up 4% from a year earlier, and adjusted earnings of $3.38 per share, slightly ahead of analysts' expectations.

McDonald's heavily franchised business model, in which most restaurants are owned by independent operators who pay rent and royalties, gives it high profit margins compared with many other restaurant chains.

The company's new beverage platform has also performed better than expected in markets including the United States, Canada, Germany and Australia.

Rising yields add pressure

Beyond company-specific concerns, McDonald's stock has been pressured by rising interest rates.

The yield on the 10-year U.S. Treasury note recently climbed to its highest level since 2007, as traders bet the Federal Reserve will raise interest rates again. Higher bond yields make dividend-paying stocks such as McDonald's less attractive to income-focused investors, since government bonds offer a competing source of steady returns.

Consumer-focused stocks have also faced pressure from rising costs and concerns about household spending as inflation remains elevated.

Dividend increase

McDonald's raised its quarterly dividend earlier this month to $1.93 per share from $1.86, a 4% increase. The new dividend, equal to $7.72 a year, is payable on Dec. 15.

The company has increased its dividend for nearly 50 consecutive years, a record that has long made it a favorite among income investors. With the stock's decline, its dividend yield has climbed to above 3%.

Contrarian case

Some analysts argue the selloff may have gone too far, pointing to McDonald's strong brand, global scale and a loyalty program with about 220 million users.

Others remain cautious, saying the company needs to show clear progress in reviving traffic and improving its value perception before the stock can recover.

McDonald's is scheduled to report third-quarter earnings on Oct. 22. Investors will watch closely for signs that the company's value push and new initiatives are driving improved sales and traffic, particularly among lower-income customers.

The results will also offer an early look at how the company's investor day plans are translating into performance as it heads into 2027.