McDonald's Corp (MCD.N) — Final Bite from Chicago: Legging Into Next Spend/SSS Loop

Citi maintains a Buy rating on McDonald's Corp (MCD.N) but lowers its target price to US$305 from US$310, based on 15x its NTM, 12 months from now, EBITDA estimate, implying ~28% expected share price return and a 3.2% dividend yield. Following the Chicago investor day, Citi believes franchisee partnering flowing through the P&L drove recent share performance: (1) rent relief will be amortized over remaining franchise agreement terms, with only a ~25bps/18bps drag on US/IOM royalty rates by '30; (2) US franchisees rolling from a 4% to 5% royalty on renewal or transfer would make year-over-year royalty changes flat-positive; (3) pick-up in sales between operators (SBOs) further accelerates the roll to higher royalties;