11:37 AM EDT, 07/11/2024 (MT Newswires) -- McDonald (MCD) is likely to report a downbeat Q2 performance due to weak consumer demand, Morgan Stanley said in an earnings preview Thursday.

"Incremental views have been negative, with pessimism on the company's ability to reassert a value advantage," Morgan Stanley said in the report, adding that high frequency data would suggest the $5 meal launched in June hasn't had much initial impact.

"The problem in the broader sector right now, carrying over to stock performance, is that despite a lot being thrown at consumers, it doesn't seem to be catalyzing demand that has been in a rut," the report said.

Morgan Stanley cut its price target on the stock to $300 from $312 while keeping its overweight rating, saying that the call requires some patience as it expects the company to have the capacity to rebuild this value reputation and leverage the advantages built up over the last eight years against its peer group.

The report also said valuation is close to support level but that consensus numbers could still compress.

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