Wall Street is wondering what to do about McDonald’s as the stock takes a hit following the E. outbreak. coli reported by the fast food giant. The Centers for Disease Control and Prevention said Wednesday that the McDonald’s Quarter Pounder hamburger was linked to 10 hospitalizations and one death. McDonald’s said an initial investigation showed some of the cases may have come from its sliced onions, which come from a single supplier. McDonald’s has asked all local restaurants to remove chopped onions from their supply and has temporarily stopped offering the Quarter Pounder in several Western states, including Colorado, Kansas and Utah. Shares of the Chicago-based chain fell more than 6% in early trading Wednesday. MCD 1D Mountain McDonald’s, 1 day With this information, several analysts have drawn comparisons between McDonald’s predicament and an E.coli outbreak linked to Wendy’s lettuce in 2022. This situation is considered a better situation than what Chipotle has seen with multiple foodborne illnesses affecting the Mexican Fast. casual dining restaurant for several years in the 2010s. “The headlines on food safety are obviously negative,” said Lauren Silberman, an analyst at Deutsche Bank. But, “assuming that the outbreak is an isolated problem identified at the supply chain level, the incident appears to be more similar to the isolated E. coli outbreak. WEN’s coli outbreak in 2022 linked to its supply chain rather than CMG’s multiple foodborne illnesses in 2015, where issues were more systemic. UBS analyst Dennis Geiger came to the same conclusion, calling the outbreak “most contained so far.” He said McDonald’s should limit “further damage” by managing the situation. proactively Still, restaurants that witnessed these types of outbreaks generally felt some pain in their stock Barclays said Chipotle shares plunged more than 35% between early 2015 and late 2018. During. Meanwhile, the S&P 500 jumped about 22% during the same period. Shares of Jack in the Box, which had a well-known outbreak in the early 1990s, also fell by more than 35%. % between the beginning of 1992 and the end of 1993, according to Barclays data For comparison, the S&P 500 rose about 15% during that period But the company also found that these stocks were able. rebound significantly. Chipotle shares have rebounded about 1,100% since their February 2018 low, while Jack in the Box has soared more than 2,500% from a 1995 low. ..) an underperformance of MCD stocks in the short term. That said, using history as a guide, time will likely heal these wounds,” Barclays analyst Jeffrey Bernstein wrote in a note to clients. “As JACK & CMG’s historical record shows, the damage The immediate effects caused to a brand can be serious, although they are eventually overcome.” Bernstein was one of several analysts to mention social media as a variable in how the McDonald’s outbreak is perceived by the public. He said the company’s earnings report, due next week, offers an opportunity to ease concerns. Media scrutiny, along with the scale of the problems, have contributed to an “anemic” recovery. » of Chipotle’s same-store sales growth after its ordeal, according to Bank of America On the other hand, analyst Sara Senatore called the outbreak’s impact on Wendy’s “fleeting,” highlighting the results. very different for catering businesses in this situation. Based on historical trends and currently available information, Gordon Haskett analyst Jeff Farmer estimated that McDonald’s same-store sales will likely decline at a mid-to-high single-digit pace this week and next week. Citi, meanwhile, said the news is expected to hurt both McDonald’s stock and its comparable numbers. Analyst Jon Tower listed Wendy’s and Jack in the Box, as well as Restaurant Brands, parent company of Burger King, and Yum Brands, parent company of Taco Bell, as stocks likely to benefit from McDonald’s troubles. Analysts Rate the Stock Several analysts have recommended the stock despite the news, with some going so far as to call the drop a buying moment. “We know we’re going to be asked a direct question here, so we’ll answer it: With the stock down about 6%, we are long MCD,” JPMorgan’s John Ivankoe wrote to clients. Wells Fargo analyst Zachary Fadem made a similar statement, citing Wendy’s as “a precedent for a strong stock rally.” He noted that Wendy’s underlying business has not been impacted by the outbreak, specifically pointing to the fact that domestic comparable sales accelerated in the last two quarters of 2022. “We remain OW thanks to beaten expectations in the second half and confidence that MCD’s supply chain is sophisticated enough to identify/resolve this issue quickly,” Fadem wrote in a note. “So we see a buying (opportunity) Baird analyst David Tarantino lowered his rating on McDonald’s from outperform to neutral in the wake of the outbreak. He said that this adds to concerns about the broader economic backdrop for the fast food stock “We are concerned that reports of an outbreak of E. coli linked to McDonald’s restaurants in several US states could pose a major threat to consumer confidence and to US MCD companies,” he said. “With uncertainty now taking hold across all segments, we struggle to see near-term upside for stocks.” Guggenheim analyst Gregory Frankfurt upgraded from buy to neutral, saying the outbreak creates a “wide range of uncertainties.” “With “But the attention Media coverage of a food safety issue announced yesterday after the market close adds to the risk and with stocks down only single digits in post-market trading, we fear these risks are not adequately reflected in the initial reaction. “We believe McDonald’s has compelling business strengths in the United States that keep its long-term story on track,” he added. “But we fear that short-term sales difficulties will now cause downward pressure on stocks.”