Another McDonald’s Downgrade (MCD)

McDonald’s Corporation (NYSE: MCD) is supposed to be immune from the woes of the world.  Its share price is reflective of that.  The company has managed to perform over and over and turn in solid same-store sales growth endlessly as though the Big Mac is the world’s food of choice.  At some point, valuations have to come into play and that is what we are starting to see as far as the shares of McDonald’s.

After a stock runs over and over, analysts eventually have to raise their price targets to stay after a stock or they have to bite the bullet and downgrade the stock on valuations.  We have seen two valuation downgrades now this week. 

This morning came a downgrade from Bernstein, cutting the Golden Arches to “Market Perform” from “Outperform.”  Earlier this week came an Oppenheimer downgrade to “Perform” from “Outperform.” 

Don’t hit the panic button too quickly here.  BMO Capital Markets just recently raised its price target to $110 per share.  Another article from Seeking Alpha says that McDonald’s is on its way to $200 in the share price.

McDonald’s stock is down 0.6% this morning at $98.60.  Just keep in mind that Mickey Dee’s was the best DJIA stock in 2011 and the 52-week range is $72.89 to $102.22.  Now that Ben Bernanke and friends have told investors that low rates may last another three years and that they should buy risk-trade assets, defensive stocks may have to turn in some of the market premium that they have been carrying.

JON C. OGG