McDonald's (MCD) is the worst Dow Jones stock Wednesday after the Centers for Disease Control and Prevention (CDC) announced it is investigating an E. coli outbreak linked to the fast-food chain's Quarter Pounder hamburgers.
"This is a fast-moving outbreak investigation," the CDC said, adding that most of those impacted reported eating the restaurant's Quarter Pounders. Investigators are "working quickly" to identify which ingredient is contaminated. "McDonald's has pulled ingredients for these burgers, and they won't be available for sale in some states."
The CDC's food safety alert currently lists 49 cases across 10 states, which have caused 10 hospitalizations and one death, adding that most illnesses have occurred in Colorado and Nebraska. However, the true number of sick people could be much higher, because "many people recover without medical care and are not tested for E. coli," the federal agency said.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
McDonald's is working with investigators to determine what food ingredient is making people sick and has stopped using fresh slivered onions and quarter-pound beef patties in several states in the meantime.
"Across the McDonald's System, serving customers safely in every single restaurant, each and every day, is our top priority and something we'll never compromise on," the company said in a statement. "It is why we are taking swift and decisive action following an E. Coli outbreak in certain states."
Is McDonald's stock a buy, sell or hold?
McDonald's stock has lagged the broader market in 2024, up 8% on a total return basis (price change plus dividends) vs the S&P 500's 24% gain. But Wall Street remains bullish on the blue chip stock.
According to S&P Global Market Intelligence, the average analyst target price for MCD is $315.91, representing implied upside ofmore than 5% to current levels. Additionally, the consensus recommendation is Buy.
Financial services firm Jefferies is one of the more bullish outfits on the consumer discretionary stock with a Buy rating and $345 price target.
"Although we are not discounting the risk to guest perception/food safety concerns, we believe the near-term impact could prove less dire than that of prior outbreaks elsewhere in the industry," says Jefferies analyst Andy Barish."
The analyst adds that he's waiting for additional commentary to see whether near-term estimates will need to be adjusted.
"Longer term, we continue to see opportunities for modest margin expansion, strong free cash flow conversion, healthy balance sheet and total shareholder return, and accelerating unit growth that should continue to support the multiple and stock," he notes.
Related Content
-
What Is a Medallion Stamp? The Requirement for Transferring SecuritiesTransferring securities from one account to another often requires this extra step.
-
Would You Benefit From Investing in Cryptocurrency?Understanding the complexity of adding digital currency to your investments is critical, especially since drastic price changes can happen very quickly.
-
Why Company Stock May Be Riskier Than Employees RealizeStock compensation has its perks, but employees must be realistic (and unemotional) about their investments' prospects. Sometimes strategic sales are smart.
-
Can You Be Fired for Going to Work When You're Contagious?What's an employer to do when an employee shows up at the office with a cold or the flu and spreads germs to co-workers?
-
Stock Market Today: Markets Celebrate Trump's Tariff DétenteConsumer discretionary stocks led the 11 S&P 500 sector groups well into the green.
-
Social Security Fairness Act: Five Financial Planning Issues to RevisitMore money as a public-sector retiree is great, but there could be unintended consequences with taxes, Medicare and more if you're not careful.
-
Social Security Warning: Five Missteps Too Many Women MakeClaiming Social Security is complicated, and for women the stakes are high. What you don't know can cost you, so make sure you do know these five things.
-
To Buck the Third-Generation Curse, Focus on the Family StoryThe key is to motivate the next generations to contribute to the family business in a productive way. You can look to Lawrence Welk's family as a prime example.
