McDonald’s Corporation (MCD) shares fell by over 5%, as food safety concerns related to an E. coli outbreak linked to its Quarter Pounder hamburgers caused financial services firm Baird to downgrade its rating on the stock to neutral.
Baird cited the potential damage to consumer sentiment, which is critical for McDonald’s U.S. sales. The Centers for Disease Control and Prevention (CDC) is investigating cases across ten states, with 49 illnesses, 10 hospitalizations, and one death reported.
Baird has lowered its earnings per share (EPS) forecast for Q4 to $2.87, reflecting a 4% decrease. It has also adjusted its 2025 projection to $12.30 due to the anticipated impact on U.S. sales. Despite the downgrade, Baird maintained confidence in McDonald’s long-term fundamentals, setting a new price target of $290. However, uncertainty surrounds the short-term outlook for the company, especially with quarterly earnings due on Oct. 29.
This outbreak has drawn comparisons to Chipotle’s (CMG) 2015 E. coli crisis, which led to a significant sales decline. While McDonald’s might avoid similar severe impacts due to its stronger supply chain, the risk remains concerning.
McDonald’s U.S. President, Joe Erlinger, reassured customers in a recent YouTube video that “most menu items are not affected” by the outbreak, emphasizing that the company has temporarily halted the use of fresh slivered onions and quarter pound beef patties while working with health officials.
