McDonald’s Corp. experienced a sharp decline in pre-market trading on Wednesday, dropping 6.15% following a concerning report from the U.S. Centers for Disease Control and Prevention (CDC). The CDC linked an E. coli outbreak to McDonald’s Quarter Pounder burgers, raising serious concerns about food safety and potentially impacting the company’s upcoming earnings report.
The CDC is actively investigating the outbreak, which has affected 49 individuals across 10 states in the West and Midwest. Ten individuals have been hospitalized, and tragically, one fatality has been reported. This development comes just days before McDonald’s is set to release its third-quarter earnings on Tuesday, October 29.
At the time of writing, McDonald’s stock was trading at $295.51, a significant drop from its closing price of $314.69 on Tuesday, as per Benzinga Pro. In response to the outbreak, McDonald’s has taken immediate action by removing certain ingredients used in its Quarter Pounder burgers. This has resulted in some Quarter Pounder products being unavailable in specific states. The CDC is working diligently to identify the specific ingredient responsible for the outbreak.
Adding to the complexity of the situation, former President Donald Trump was spotted last weekend serving customers at a McDonald’s drive-thru in Pennsylvania. While this is unrelated to the E. coli outbreak, it highlights the high profile of the fast-food chain and the potential for increased media attention surrounding the situation.
The timing of this E. coli outbreak couldn’t be worse for McDonald’s. The company is preparing to release its third-quarter earnings report, and any negative impact on consumer confidence and sales could significantly affect their financial performance. The potential for the outbreak to spread and the possibility of additional cases being reported further add to the uncertainty surrounding the situation.
According to the latest analyst estimates on Benzinga Pro, McDonald’s Corp has a consensus price target of $319.65, with recent ratings suggesting an 8.49% potential upside. However, the E. coli outbreak could potentially derail these positive projections, depending on the severity of the outbreak and the public’s response.
The E. coli outbreak is a serious setback for McDonald’s, especially considering its upcoming earnings release. It remains to be seen how this situation will unfold and what the long-term impact will be on the company’s stock price and overall business performance.
