Shares of McDonald’s (NYSE: MCD) came under fresh pressure after Redburn Atlantic issued a stark downgrade on Tuesday, slashing its price target by nearly 20%.
McDonald’s stock closed at $304.78, down 0.84% on the day. After the downgrade hit the tape, MCD shares extended losses in pre-market trading, falling to $300.91, a drop of 1.27%.
Redburn analyst Chris Luyckx cut his rating on the stock to Sell from Buy, while lowering his price target to $260 from $319.
Why the heavy Wall Street downgrade for McDonald’s stock?
In a note to clients, Luyckx warned that despite McDonald’s “best-in-class scale and global reach,” cracks are starting to appear:
“Traffic is soft, especially in the U.S., where pricing fatigue and value perception are growing concerns. The brand’s higher long-term GLP-1 exposure adds downside risks.”
He also flagged that the stock’s valuation is elevated, with shares currently trading at 25.1x 2025 earnings. Margin expansion potential looks limited, Luyckx added:
“Valuation is near historical peaks, and margin expansion from general and administrative leverage in the near term looks limited.”
His revised $260 price target corresponds to a more conservative 22.1x P/E multiple.
The downgrade comes as McDonald’s faces a challenging consumer environment, particularly in its core U.S. market, where high prices are beginning to weigh on traffic and perceived value.
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