Hello Traders! 🌟
Today, we’re taking a closer look at McDonald’s Corp. as the company's stock experiences moderate growth, despite cost pressures and expansion plans. Investors are paying close attention as leading analysts reaffirm their positions on the stock while the company gears up for its Q2 2024 financial report. Let's dive into the current market situation, technical analysis, and what traders should watch out for.
Market Overview
As of September 20, 2024, McDonald’s Corp. shares are trading around $293.00, showing modest growth as it continues to face both opportunities and challenges. Citigroup Inc. analysts recently reaffirmed their Neutral rating for the stock, raising the target price to $301.00 from $275.00. This increase comes on the back of positive forecasts surrounding McDonald’s upcoming financial report due on October 23, 2024.
Meanwhile, Loop Capital raised its price target to $342.00, emphasizing the company's continued expansion of its "5 dollars meal deal" promotion, which is expected to drive substantial sales until the end of the year. This promotion acts as a substitute for the delayed launch of the company's highly anticipated online shopping platform, now slated for 2025.

However, McDonald’s faces significant cost pressures from rising wages and food prices, which could potentially hinder profit growth despite rising revenues. Analysts forecast Q3 2024 revenue at $6.76B, up slightly from the $6.49B posted last quarter. Earnings per share (EPS) are expected to hit $3.18, showing steady growth from the previous quarter’s $2.97.
In short, while McDonald’s is well-positioned for growth with continued global expansion and effective marketing strategies, cost challenges remain a concern for investors.
Fundamental Insights: Growth Amid Cost Challenges
Growth Prospects: McDonald's continues to find new ways to fuel growth, particularly through its global marketing and promotional strategies. The extension of the "5 dollars meal deal" is a notable driver, especially as economic conditions push consumers toward more value-driven dining options. With inflation impacting household budgets, affordable meal deals are expected to attract more foot traffic, boosting revenue in the short term.
Additionally, McDonald's global expansion remains a bright spot, with plans to open hundreds of new locations, particularly in emerging markets. The company’s ability to leverage technology, such as digital ordering and delivery partnerships, plays a critical role in enhancing customer experience and driving revenue.
Challenges: Cost pressures continue to challenge the company’s bottom line. Rising labor costs, higher commodity prices, and the general inflationary environment are likely to squeeze margins. Analysts have noted that higher wages in the fast-food sector could create long-term headwinds, especially as competition increases, and other brands attempt to roll out similar value-driven promotions.
Meanwhile, the postponed launch of the online shopping platform creates an opportunity cost, as the digital space becomes increasingly crucial for brand differentiation and customer engagement. However, McDonald's is leveraging its app-based deals and loyalty programs to maintain digital engagement with its customer base until the platform can be launched in 2025.
Technical Analysis
On the daily chart, McDonald's Corp. stock is moving within a long-term ascending channel ranging between $300.00 and $285.00, with a potential breakout toward $310.00 on the horizon.
The Alligator Indicator continues to display a long-term buy signal, despite the slowdown in upward momentum. The fast EMAs remain above the signal line, indicating that bulls are still in control, although the AO histogram shows some signs of correction.
Key resistance levels are $298.00 and $310.00, while support levels lie at $290.00 and $277.00. A breakout above the upper resistance could set the stock on a path toward higher gains, while a break below support would signal the potential for further downside.

Market Considerations: Scenarios for McDonald's Corp
Here are the two possible scenarios that traders should monitor based on the current market outlook and technical indicators:
Bullish Scenario: If McDonald's stock consolidates above $298.00, it could gain momentum to test the $310.00 resistance level. A successful break above this level could push the stock toward the next target at $342.00, fueled by strong Q3 earnings and continued success of the "5 dollars meal deal." Global expansion plans also remain a bullish factor, with more markets opening and digital efforts gaining traction.
Bearish Scenario: On the downside, a break below $290.00 could lead to a retest of $277.00 as the stock faces pressure from rising costs. Additionally, if the global economy slows down further, or if consumer spending weakens, McDonald's could face further challenges in maintaining its revenue growth, pushing the stock toward lower support levels.
Conclusion: What to Watch for in McDonald's Corp
As McDonald’s approaches its Q3 earnings report and continues to expand its promotional efforts, the stock is positioned for potential growth, provided it can navigate rising costs. Key resistance levels at $298.00 and $310.00 will be crucial for traders to monitor in the coming days, as breaking through these could pave the way for more upside. On the other hand, rising cost pressures and potential macroeconomic headwinds could push the stock lower toward $277.00 support.
Keep an eye on global economic trends, particularly around inflation and consumer spending, as they will likely have a significant impact on McDonald's financial performance. The company's ability to manage costs and effectively execute its marketing strategy will be key to determining the stock’s trajectory in the coming months.
🔔 Remember to assess all relevant factors and conduct thorough research before making any trading decisions.