McDonald's Investment to Compete with Specialist QSRs May Pressure FCF, Morgan Stanley Says

MT Newswires Live00:14

McDonald's (MCD) is entering a new investment cycle to defend its global Quick-Service Restaurant market share against specialist QSRs, which will shape the stock's story over the next several years, Morgan Stanley said in a note on Thursday.

The company is moving back into a heavier capital expenditure phase similar to what it did a decade ago with the "Experience of The Future" remodel program, which created a competitive advantage, but eventually, pricing diluted some of that benefit, the firm said.

The upcoming investments are expected to increase capital expenditures, pressure margins, and pose a risk to menu complexity, the firm said.

The firm added that earnings for 2026 and 2027 are expected to come in slightly below its estimates.

Morgan Stanley maintained its equalweight rating and $335 price target on the stock.

Price: 329.87, Change: +6.66, Percent Change: +2.06

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap
Leave a comment