McDonald's Value-First Push Fails to Boost Sales, Analyst Warns

McDonald's value-first push may fail to drive US comp revisions or multiple expansion, according to TD Cowen analyst Andrew M. Charles. The company's focus on value won't drive positive US sales revisions or justify multiple expansion, Charles said, citing weakened value perceptions. Charles raised the price forecast from $305 to $315 and maintained his second-half of 2025 US comparable-sales estimate.

McDonald's Corporation (MCD) shares experienced a dip on Thursday, August 6, 2025, following a warning from TD Cowen analyst Andrew M. Charles. The analyst reiterated his Hold rating on the stock but raised the price forecast from $305 to $315. Charles expressed concerns that the company's value-first push may not drive positive U.S. sales revisions or justify multiple expansion.

In the second quarter, McDonald's reported adjusted earnings per share of $3.19, exceeding the analyst consensus estimate of $3.14. Quarterly sales reached $6.843 billion, surpassing the Street's view of $6.682 billion. The analyst attributed this performance to stronger-than-expected international comparisons (comps), driven by value initiatives and prudent pricing that resonated with customers [1].

However, Charles noted that the company's focus on value may not translate into positive U.S. sales revisions or multiple expansion. He cited weakened value perceptions and argued that reviving the marketing and menu innovations that succeeded from 2020-2023 would be more profitable. Until McDonald's delivers positive U.S. sales revisions, Charles does not expect its shares to earn multiple expansion.

Charles maintained his second-half of 2025 U.S. comparable-sales estimate, noting that McDonald's is navigating a softer lower-income consumer backdrop. He raised the International comps forecast after the second-quarter outperformance, pointing to value initiatives and prudent pricing that resonated with customers. However, he does not expect enough upside to deliver material alpha [1].

Following the results, Charles indicated that the next catalysts are third-quarter EPS in November and ongoing tracking of proprietary survey data to evaluate how effectively value initiatives are resonating. He stated that, as a base-case assumption, he models U.S. comparable-sales growth of 1.7% in 2025.

Price action: McDonald’s shares are trading lower by 0.85% to $305.03 at last check on Thursday, August 6, 2025 [1].

References:
[1] https://www.benzinga.com/analyst-stock-ratings/analyst-color/25/08/46977608/mcdonalds-value-first-push-fails-to-spur-multiple-expansion-analyst