Zacks Investment Research downgraded shares of McDonald's Corp. (MCD) from NEUTRAL to UNDERPERFORM on July 30, 2012, with a target price of $81.00.
McDonald's enjoyed increased global same-store sales and moderate growth prospects with its exposure to faster-growing international markets, a strong balance sheet and consistent earnings. However, its lower-than-expected earnings as well as revenue in the second quarter came as a shock. The macroeconomic headwinds especially in Europe, decelerating growth in Asia and higher commodity and labor costs globally will likely impede sales and margin expansion of McDonald's going forward. Moreover, intense competition and increased selling, general and administrative expenses, rising tax rate as well as the expected currency headwinds for 2012 add woe to the worry. Hence, in the face of underwhelming earnings report and decelerating same-store sales momentum, we downgrade the stock from Neutral to Underperform recommendation.
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