McDonald’s outbreak doesn’t seem medium/longer term threat, says Morgan Stanley

After the CDC announced an investigation into an E. coli outbreak linked to McDonald’s (MCD) quarter pounder burgers, Morgan Stanley noted that the company has “usually had a good track record on food safety globally and been very focused on this.” If the issue is in fact confined to a single vegetable supplier, as noted, the firm thinks that is “probably the best outcome in this type of situation” as it does not suggest a process problem in restaurants or an issue with beef supply, which could be broader and sometimes more severe. While this creates some business disruption in the short term in select markets, the firm doesn’t think this is a medium/longer term threat to McDonald’s business stability or reputation, though the firm acknowledges “there may be somewhat of an initial knee jerk reaction in the stock price.” Morgan Stanley has an Overweight rating on McDonald’s shares.