AP News

Ahead of the Bell: Analysts cuts McDonald's rating


NEW YORK (AP) — An analyst cut McDonald's rating and price target on Friday, saying that difficult year-ago comparisons may pressure a key revenue metric for the world's biggest burger chain.

Janney Capital Markets' Mark Kalinowski said in a client note that Wall Street may be overestimating the revenue at U.S. locations open at least 13 months that McDonald's Corp. may be able to achieve over the next six to nine months.

Revenue in restaurants open at least 13 months is a key measure of a restaurant chain's performance because it strips out the impact of recently opened or closed stores. The figure is a snapshot of money spent on food at both company-owned and franchised restaurants. It does not reflect corporate revenue.

Kalinowski also says that he is hearing from industry sources that the Oak Brook, Ill.-based company's key revenue figure may come in soft in September. The analyst says if the revenue figure worsens, he would be concerned about what that suggests about the six to 12 month outlook for the U.S. economy and the burger industry's role in that economy.

Kalinowski says McDonald's shares are up $7 to $8 since early August, making them less of a bargain for investors.

The analyst lowered McDonald's to "Neutral" from "Buy" and trimmed its price target to $100 from $105.

The company's stock fell 28 cents to $92.99 in premarket trading. Its shares are down 9 percent from their 52-week peak of $102.22 in mid-January. They traded as low as $83.74 in early October 2011.


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