-- McDonald's (MCD) first-quarter US same-store sales growth is likely to fall short of consensus estimates, with momentum seen moderating into the ongoing quarter amid softer trends due to high fuel prices and macro pressures, UBS Securities said Monday.
The brokerage expects the fast-food giant to post a 3.5% increase for US comparable sales in the first quarter, compared with the consensus of 4% growth. McDonald's is scheduled to report Thursday.
The company started the quarter with solid momentum, but trends likely slowed down due to elevated fuel prices and pressured consumer sentiment, potentially offsetting some of the gains from its value initiatives.
"Our discussions suggest negative investor sentiment, likely reflecting concerns around slowing US sales trends (in the second quarter to date), difficult US comparisons in (the second half), and potential impacts from the Middle East conflict in Europe and globally," UBS analyst Dennis Geiger said in a note to clients.
Energy prices have soared as the US-Israel war with Iran curtailed shipments through the crucial Strait of Hormuz. The conflict paused following a recent ceasefire between Washington and Tehran, but a framework for a permanent truce is yet to be reached. The war started at the end of February.
McDonald's sales momentum is likely to have moderated in April, but UBS anticipates the company to continue to execute on key initiatives, with its value offerings, menu innovation and marketing to further resonate with consumers, including in the US. For 2026, the brokerage forecasts the company to record same-store sales growth of 2.3% in the US.
"We believe risk/reward for (McDonald's) shares is attractive despite near-term pressures, given catalysts with potential to drive market share gains and strengthen US sales growth, and defensive characteristics that should provide earnings stability in a still volatile environment," Geiger said. "We believe the brand remains well positioned globally and maintains important initiatives to strengthen trends."
In April, RBC Capital Markets said it expected McDonald's first-quarter results to largely match Wall Street's expectations, with potential for downside given the company's exposure to low-income US consumers that are facing war-driven elevated energy prices.
Last month, a survey by the University of Michigan showed that consumer sentiment improved from an initial April estimate, but remained at a record low as near-term inflation expectations logged the biggest monthly increase in a year.
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