McDonald's (MCD) is scheduled to report results of its fiscal third quarter before the market opens on October 27, with a conference call scheduled for 8:30 am ET. What to watch for:

GUIDANCE: While McDonald's did not provide specific Q3 guidance in its last report, the burger giant said on its quarterly call that it expects foreign exchange to impact Q3 earnings per share by 14c-16c and fiscal 2023 earnings per share by 40c-50c. The company added on the call at the time that it expects inflationary pressures to impact markets for the remainder of the year and that inflationary pressure in Europe is beyond what is seen in the U.S. Wall Street expects McDonald's to report Q3 EPS of $2.58 on revenue of $5.69B.

BARCLAYS: Last week, Barclays analyst Jeffrey Bernstein lowered his price target on McDonald's to $270 from $285 and maintained an Overweight rating on the shares. Sales in Q3 for restaurants re-accelerated modestly from a June pullback, demonstrating "surprising resilience," Bernstein told investors in a research note. Food inflation and labor shortages are showing signs of easing, while outsized pricing is intact into 2023, said the analyst, who noted he cannot dismiss looming recessionary concerns, but sees "no material signs thus far" as eating is "not discretionary."

CREDIT SUISSE: Also last week, Credit Suisse analyst Lauren Silberman cut her price target on McDonald's to $272 from $287 and kept an Outperform rating on the shares ahead of quarterly results. The analyst believes McDonald's strength continued in Q3 and overall sentiment remains positive broadly. Silberman continues to like McDonald's defensive business model and strong value position believes McDonald's is well positioned to execute irrespective of the consumer backdrop, noting it was one of a few public restaurants to demonstrate consistently positive U.S. same-store sales in 2007-2010 and thinks McDonald's value leadership and operational strength should support relative resilience in international markets. Given the current backdrop and at current valuation, the analyst believes McDonald's offers a favorable risk/reward.

CITI: In late September, Citi analyst Jon Tower lowered the firm's price target on McDonald's to $246 from $275 and kept a Neutral rating on the shares, saying he sees an "increasingly less favorable" risk/reward in McDonald's shares, with currency and macro challenges in Europe "looming over" earnings estimates heading into Q3. Further, the stock's valuation leaves "little room for shares to absorb negative estimate revisions," Tower told investors in a research note. He says McDonald's U.S. same-store sales would need to beat "already strong" expectations by a mid-single-digit percentage to offset marking to market for currency and even a low-single-digit decline in the Europe same-store-sales outlook. As such, he opened a "90-day negative catalyst watch" for McDonald's shares.

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