Selected stock price target news of the day - July 28, 2023

By: Matthew Otto

 

McDonald’s Reports Global Sales Increase of 11.7%

 

McDonald’s has reported robust second quarter results for 2023, The report highlights that the global comparable sales increased by 11.7% for the quarter. This growth spanned across all segments: U.S. sales saw an increase of 10.3%, International Operated Markets segment grew by 11.9%, and the International Developmental Licensed Markets segment jumped up by 14.0%.

In terms of digital sales, the company has reported over $8 billion for the quarter in its top six markets. This figure accounted for nearly 40% of systemwide sales in these markets, demonstrating the strength of McDonald’s digital strategy.

The consolidated revenues increased by 14% and systemwide sales saw an increase of 12%. Further, the report shows a surge in the consolidated operating income, which increased by 81%. This sharp increase was partly attributed to McDonald’s internal effort to modernize its ways of working, which they referred to as ‘Accelerating the Organization’.

The report showed that the diluted earnings per share were at $3.17, marking an increase of 97%. This figure showed a 24% increase and was significantly higher than the estimated $2.78 per share.

In terms of total sales, McDonald’s brought in $6.5 billion, which was higher than the projected $6.3 billion. The company attributes the growth in same-store sales to strategic menu price increases and a high volume of diners. Interestingly, McDonald’s revealed that it has gained market share among higher-income consumers.

However, the company also observed a trend of reduced ordering from lower-income customers due to increased price sensitivity. This trend might pose challenges to McDonald’s ability to continue raising prices in future. In spite of these potential headwinds, McDonald’s was able to raise its projections for the fiscal year 2023 operating margin to about 46% from about 45%.

 

Wall Street Analysts Keep their Recommendations on McDonald

 

  • Stephens & Co. analyst Joshua Long has reiterated an Overweight rating and a price target of $325.
  • Wedbush analyst Nick Setyan has also maintained an Outperform rating and a price target of $330.
  • John Ivankoe, an analyst from JPMorgan, has raised the price target for McDonald’s to $320.

 

Analyst Brian Mullan (DEUTSCHE BANK) has currently the highest performing score on MCD with 19/19 (100%) price target fulfillment ratio. His price targets carry on average an $18.54 (8.98%) potential upside. McDonald’s  stock price reaches these price targets on average within 179 days.

 

Southwest Sees Lower Revenue Margins Next Year

Southwest Airlines has reported its Q2 2023 financial results. The company posted a net income of $683 million, or $1.08 per diluted share, and excluding special items, a net income of $693 million, or $1.09 per diluted share which is in-line with forecasts from analysts surveyed by FactSet, but lower than earnings of $1.30 per share it saw a year ago. The airline achieved record quarterly operating revenues of $7.04 billion which is over Wall Street estimates of $6.98 billion. The company’s liquidity stood at $13.2 billion, significantly higher than its debt outstanding of $8.0 billion.

Southwest Airlines also expects a pre-tax profit contribution in full year 2023 ranging from $1.0 billion to $1.5 billion. The company projects an incremental year-over-year pre-tax profit of approximately $500 million, thanks to network optimization efforts and the continued maturation of development markets.

In the company’s financial guidance, the company expects third-quarter 2023 RASM (Revenue per Available Seat Mile) to decrease by 3% to 7% year-over-year, and the economic fuel costs per gallon to be in the range of $2.55 to $2.65 and available seat miles, or capacity, to rise 12% year over year in the quarter. Indicating lower profitability in its outlook.

Analysts Adjust Ratings and Price Targets on Southwest Airlines Following Q2 2023 Financial Results

  • Raymond James’ analyst, Savanthi Syth, has downgraded from a Strong Buy to Outperform, concurrently lowering the price target from $47 to $40.
  • Deutsche Bank’s analyst Michael Linenberg has moved from a Buy to a Hold rating, while decreasing the price target from $52 to $38.
  • BofA Securities’ analyst Andrew Didora has downgraded from Buy to Neutral, in addition to lowering the price target from $45 to $35.

 

Analyst Jamie Baker (JPMORGAN) has currently the highest performing score on LUV with 14/21 (66.67%) price target fulfillment ratio. His price targets carry on average an $7.13 (19.07%) potential upside. Southwest Airlines stock price reaches these price targets on average within 199 days.

 

First Solar Beats Q2 2023 Expectations; Announces $1.1B Investment for New US Manufacturing Facility

First Solar has announced its Q2 2023 financial results, beating analysts’ expectations. The company reported net sales of $811 million, a figure notably higher than the forecasted $711 million. This increase was primarily driven by a rise in the volume of modules sold and an increase in the average selling price of its modules.

The net income per diluted share for the quarter was reported at $1.59, an increase from $0.40 in Q1 2023.

Commenting on the company’s performance, CEO Mark Widmar noted the firm’s strengthened commercial, operational, and financial foundations, marked by a ramp-up in the production of its next-generation Series 7 modules and strong bookings. Widmar also announced a planned investment of up to $1.1 billion in a new 3.5 GW Series 7 US manufacturing facility, marking the company’s fifth such facility in the country.

The company’s 2023 guidance has been updated, with operating expenses now expected to range between $450 million and $475 million. The net cash balance is anticipated to be between $1.5 billion and $1.8 billion, and capital expenditures are projected at $1.7 billion to $1.9 billion. Other metrics remained unchanged.

Baird Adjusts Its Price Target on First Solar

 

  • Baird analyst Ben Kallo raised the price target for First Solar to $229. Indicating a change from his trend in the last year by carrying potential upside.

 

Analyst Gordon Johnson (GLJ) has currently the highest performing score on FSLR with 4/9 (44.44%) price target fulfillment ratio. His price targets carry on average an $-24.36 (-23.55%) potential downside. First Solar stock price reaches these price targets on average within 54 days.

 

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