McDonald's Share Price Rises Despite Disappointing Report

On Monday, before the start of regular trading, McDonald's reported its second-quarter results:

→ Earnings per share: actual = $2.97, expected = $3.07;
→ Gross revenue: actual = $6.49 billion, expected = $6.62 billion;
→ Net profit for the quarter was $2.02 billion, 12% less than the previous year.

The company's management notes that consumers are limiting spending. CEO Chris Kempczinski mentioned that customers are buying fewer items per visit or opting for cheaper products. Many people prefer dining at home, a trend consistent across various regions of the world.

Nonetheless, McDonald's share price rose by 3.7% on Monday's trading, making it the leader of the day among Dow Jones stocks. Investors were encouraged by the following:

→ McDonald's maintains its overall forecast for new stores, capital expenditures, and operating margin for the year, whereas, for example, the Domino's Pizza chain announced it would reduce the number of new openings worldwide;
→ McDonald's is seeking ways to boost sales, such as the $5 combo meal. Initially launched for just a month, this promotion has been extended through the end of summer.

From a technical analysis perspective, McDonald's shares present concerns:

→ The upward trend (shown in blue), which had been in place for many months, has been broken – the price forcefully breached the lower boundary in May;
→ However, bulls may find hope in the fact that when the price dropped below the 2023 low of around $246 in mid-July, no further bearish momentum followed – a false bearish breakout of an important extremum formed on the chart.

But how optimistic can the prospects be?

Jefferies analysts maintain a "buy" rating for McDonald's shares, though they have lowered the target price from $320.00 to $310.00.

A significant obstacle to the rise in MCD share price is the resistance block formed by the lower boundary of the channel (as former support) and the $265 level.

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