Fast food giant McDonald’s Corporation MCD fell nearly 3% in trading Monday, closing the day at $116.30 per share. McDonald’s joined the broader market in closing the day in the red as the aftershock of last week’s Brexit decision continues to bring the markets down.
Aside from the general sell off, McDonald’s was also hurt by being downgraded by analysts at Credit Suisse CS who dropped their price target for the stock from $135 to $130. By the analysts’ measure, nearly 37% of McDonald’s revenues come from Europe, and nearly 9% comes from the United Kingdom alone.
Such exposure to the volatile area could provide major headwinds for McDonald’s, especially as European currency has and continues to decline against the dollar.
The analysts also cited a pullback in customer spending as a reason for the downgrade, in addition to the excitement over promotions starting to calm down. McDonald’s has seen great success in the offering of breakfast menu items all-day, but the longer the promotion runs the more it likely will become just another part of the menu.
McDonald’s is currently a Zacks Rank #3 (Hold), though it does have an A Growth Style Score and a dividend yield of almost 3%. The rest of the year will be something to watch for the company as it continues to face a more health conscious customer and international headwinds. McDonald’s stock is still up over 21% in the last year, but it will need to continue to come up with promotions and menu innovation to continue to see solid results.
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