E. Coli outbreak at McDonald’s not likely to spark food crisis, says Bernstein

Bernstein analyst Danilo Gargiulo notes that the CDC announced that it is investigating an E.Coli outbreak at McDonald’s (MCD) linked to its Quarter Pounder hamburger. So far, 49 people have been affected across 10 states that resulted in 10 hospitalized cases and 1 death. While E. Coli outbreaks are common in the restaurant industry, investors penalize companies with food safety-related issues, the firm adds. Following McDonald’s removal of the Quarter Pounder in select states, Bernstein’s quick estimation highlights a potential impact of up to 0.4% to same-store sales in Q4. The effect is likely more muted, and management’s quick response might further limit the impact, Bernstein argues. Yet, the firm says that like the case of Chipotle (CMG) in 2015, the outbreak may weigh in consumer’s perception of the brand’s food safety beyond the immediate impact. Bernstein has a Market Perform rating on McDonald’s with a price target of $280 on the shares.