Focus Turns to $200 Level For McDonald's Stock

The average analyst price target on MCD is right below the $200 mark

Josh Selway

Feb 19, 2019 at 10:02 AM

McDonald's Corp (NYSE:MCD) is trading up 0.9% this morning at $181.54 following a bull note out of Stephens. The brokerage firm raised its rating on MCD stock to "overweight" from "equal weight," and kept its $200 price target, saying the company's lowered expectations for 2019 have opened the door for upside surprises for the year.

Generally speaking, most analysts are already behind the fast food concern. There are 19 brokerage firms in coverage, and 14 rate it a "buy" or "strong buy." The average 12-month price target from this group is $197.69.

Analysts aren't the only ones with their eyes set on the $200 mark for McDonald's. For example, the January 2020 200-strike call and June 200 call are home to heavy open interest, and the March 200 call saw a notable increase in open interest during the past 10 days. It should be pointed out that there's been quite a bit of call selling at all three of these strikes, so these large open interest levels don't automatically suggest bullish expectations.

In early trading today though, some may be betting on more upside from the Dow component. New positions are opening at the weekly 2/22 182.50-strike call, and implied volatility is higher, suggesting potential buy-to-open activity is taking place. Right now, the Schaeffer's Volatility Index (SVI) for MCD is 16% and ranks in the 19th annual percentile, showing low volatility expectations priced into near-term contracts.

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