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
-
Why Splurging in Retirement is Totally Worth ItSplurging on yourself is okay when it fits your budget, as it can enhance your happiness and reward your hard work without compromising financial security.
-
5 Ways Portfolios Have Been Impacted In Trump's First Six Months in OfficePresident Trump's first six months in office have kept investors on their toes thanks to whipsaw tariff policies and a massive tax cut and spending bill.
-
5 Ways Portfolios Have Been Impacted In Trump's First Six Months in Office
President Trump's first six months in office have kept investors on their toes thanks to whipsaw tariff policies and a massive tax cut and spending bill.
-
We Check on Our Favorite Bond Funds Amid Tariff VolatilityBond volatility has ramped up amid debt and inflation worries. Most of our top bond ETFs are outperforming, while one laggard presents a unique opportunity.
-
Are You a Doormat at Work? The Hidden Cost of Excessive People-PleasingI talked to the author of the upcoming book 'Fawning,' and she explains how the 'fawn' response can lead to blurred boundaries, difficulty asserting needs and a loss of self, with serious emotional consequences like anxiety and PTSD.
-
A Guide to Personalizing Your Retirement Plan for Maximum ImpactThis strategy challenges conventional retirement rules of thumb by combining traditional savings, home equity and annuities to provide higher income and liquid savings and help cover long-term care costs.
-
How Advisers Can Rev Up Sales With MedicareHelp boost your revenue stream by integrating Medicare solutions into your financial practice for long-term client value and profits.
-
Stock Market Today: S&P 500 Hits High After Verizon EarningsThe Nasdaq also notched a new high on Monday, while the Dow finished with a marginal loss.
-
What Will the Fed Do at Its Next Meeting?Rate cuts remain on hold this summer, experts say.
-
Take It From a Tax Attorney: This Is a Magic Multimillion-Dollar Tax-Saving StrategyThe qualified small business 1202 stock exemption is a $10 million exclusion that seems too good to be true and is often overlooked.
