11:24 AM EDT, 07/30/2024 (MT Newswires) -- McDonald's (MCD) posted "challenging" Q2 results, with the trend seen continuing in the current three-month period although sales could improve in the second half of the year, Morgan Stanley said in a note emailed Tuesday.

On Monday, the fast-food heavyweight reported Q2 earnings and revenue below market estimates, while same-store sales declined across every segment.

"No doubt these are challenging results in absolute and likely will be in [Q3] too," Morgan Stanley said in a note to clients.

Nearly 93% of McDonald's restaurants in the US have committed to extending its $5 meal deal "even further" into the summer, McDonald's USA President Joe Erlinger said during an earnings conference call Monday, according to a Capital IQ transcript.

"Certainly the battle is not won, but (McDonald's) confirmed the US meal deal will extend and there will likely be a permanent revamp of the national value menu, which had gotten off track," Morgan Stanley said. "We don't know exactly when this will come, and consistent marketing will be key."

The brokerage reduced its price target on the McDonald's stock to $296 from $300, with an overweight rating.

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