McDonald's Stock Lower After Rare Earnings Whiff

Analysts remain firmly entrenched in the bullish camp

by Jake Scott

Published on Apr 30, 2020 at 3:27 PM
Updated on Jun 24, 2020 at 10:16 AM

The shares of McDonald's Corp (NYSE:MCD) are down 1.3% to trade at $185.48 today, after the fast food giant reported adjusted first-quarter earnings of $1.47 per share, lower than than Wall Street's estimates of $1.57 per share. This is the fast food giant's first quarterly earnings miss in two years. McDonald's also reported a dip in global sales amid limited operations at 99% of U.S. locations. Golden Arches CEO Chris Kempczinksi told CNBC that it will probably be at least a year before share buybacks will fire back up.

For now, the majority of analysts are optimistic on McDonald's stock. Of the 27 in coverage, 20 rate it a “buy” or better, against seven “holds” and not a single "sell" on the books. Echoing this is the consensus 12-month price target of $199.71, which sits up at territory not seen since mid March.

Today's pop puts McDonald's stock up a nifty 49.4% from its March 18, three-year low of $124.23. Despite this, the shares have spent the last few weeks consolidating below the $195 level, which also coincides with their 80-day moving average.

In the options pits, the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.82, sits lower than all but 12% of other readings from the past year, suggesting short-term option players have rarely been more call-biased in the past 12 months. Today alone, 20,000 call options have crossed the tape, almost double the average intraday amount and new positions being opened at the weekly 5/1 185-strike call.


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