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Pro Analysis

UBS downgrades McDonald's on slowing sales, valuation

Ronald McDonald balloon is seen at the 90th Annual Macy's Thanksgiving Day Parade on November 24, 2016 in New York City.
Noam Galai | Getty Images
Ronald McDonald balloon is seen at the 90th Annual Macy's Thanksgiving Day Parade on November 24, 2016 in New York City.

UBS reduced its rating on McDonald's to neutral from buy, saying the restaurant chain will have a difficult time growing sales in the coming quarters.

"Shares appear to largely reflect improved fundamentals and refranchising benefits," analyst Dennis Geiger wrote in a note to clients Thursday. "Despite confidence in the long-term outlook, we're lowering our rating ... we'll likely wait for greater conviction into traffic and sales acceleration and more upside to consensus estimates before revisiting our recommendation."