Lower Expectations For McDonald's, Yum Brands Heading Into 2017

Nomura’s Mark Kalinowski maintains Buy ratings on McDonald's Corporation (NYSE: MCD) and Yum! Brands, Inc. (NYSE: YUM), while reducing their price targets and estimates.

McDonald's

The price target has been reduced from $139 to $137. The EPS estimates for McDonald's for 2016 and 2017 have been reduced by $0.03 to $5.73 and by $0.08 to $6.23, respectively, based purely on currency headwinds, Kalinowski said.

The EPS estimate for 2018 has been reduced by $0.08 to $6.83 to reflect the “lower anticipated base of earnings coming off 2017E,” Kalinowski wrote.

Yum Brands

The price target has been reduced from $70 to $69. The EPS estimates for Yum Brands for 2016 and 2017 have been reduced from $3.56 to $5.54 and from $2.80 to $2.76, respectively, based solely on currency headwinds.

The EPS estimate for 2018 has been reduced by $0.04 to $3.16 to reflect the “lower anticipated base of earnings coming off 2017E,” the analyst mentioned.