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McDonald's shares drop after analyst slashes his sales estimates for the burger chain

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McDonald's new value offering isn't off to a good start, according to one Wall Street firm.

RBC Capital Market reduced its sales and earnings estimates for McDonald's shares.

The company launched its $1, $2 and $3 menu in January.

"We significantly lower our US SSS [same-store sales] expectations due to deteriorating industry conditions and a disappointing early sales impact from the $1, $2, $3 value menu," analyst David Palmer wrote in a note to clients Friday.

Palmer lowered his price target for McDonald's shares to $170 from $190, representing 9 percent upside to Thursday's close.

He reduced his first-quarter U.S. same-store sales growth forecast to 1 percent from 3.5 percent and cut his 2018 earnings-per-share forecast to $7.43 from $7.60 versus the $7.59 Wall Street consensus.

Despite the deteriorating fundamentals, the analyst is bullish on McDonald's over the long term and reiterated his outperform rating for the company.

"While we are cautious on MCD in the near term, we believe the chain has ample opportunities to course correct and re-accelerate SSS growth in the coming quarters," he wrote.



Source :- cnbc
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