McDonald's (MCD) Stock Surrenders Morning Gains on Hepatitis A Scare

Shares of McDonald’s MCD were up more than 1.1% in morning trading Thursday, but the stock surrendered its daily gains after reports surfaced that health officials were investigating a restaurant for possible hepatitis A exposure.

The case involves an employee who was infected with hepatitis A while working at a McDonald’s location in Madison County, Kentucky. Local CBS affiliate WKYT reported that the county’s health department is investigating the matter and suggests people who ate at the location on Mar 23 be on the lookout for symptoms.

Hepatitis A is characterized by symptoms of fever, fatigue, loss of appetite, nausea, vomiting, abdominal pain, dark urine, clay-colored stools, join pain, and jaundice. The infection can be prevented with a vaccination.

The Madison County Health Department said that McDonald’s has fully cooperated with its investigation, according to WKYT. The restaurant reportedly scored a 100 on its most-recent health score.

Following reports of the hepatitis A scare, McDonald’s quickly surged to become the top trending ticket on popular investing forum StockTwits. Investors appear concerned that food safety troubles could hurt the brand—just as they did to Chipotle (CMG) over the past few years.

However, this particular case appears to be an isolated incident, whereas Chipotle’s headache was linked to foodborne illness outbreaks at a number of its restaurants.

McDonald’s shares have gained nearly 25% over the past year, but the stock has dropped more than 8% from its late-January highs as analyst sentiment toward the company has cooled. Within the past 60 days, McDonald’s has witnessed six revisions to its full-year earnings estimates, with 100% agreement to the downside.

This negative revision activity has earned MCD a Zacks Rank #4 (Sell). Nevertheless, cost-cutting initiatives appear to be paying off, and despite the company’s worsening outlook, it is still expected to witness EPS growth of nearly 14% in 2018.

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