NEW YORK (CNN/Money) -
The mad cow scare may have sent restaurant-stock owners into a tizzy Wednesday, but a few Wall Street analysts believe U.S. investors shouldn't be cowed by one "isolated" case of the disease.
Indeed, the announcement from the U.S. Department of Agriculture late Tuesday of what may prove to be the first case of mad cow disease in the United States initially damaged shares of companies with a large exposure to beef.
Among the casualties were shares of steak houses Outback Steakhouse (OSI: Research, Estimates) and Lone Star (STAR: Research, Estimates), where beef is the vast majority of the menu, and fast-food chains McDonald's (MCD: Research, Estimates), Wendy's (WEN: Research, Estimates) and Jack in the Box (JBX: Research, Estimates). Trading volumes on restaurant and other beef-related stocks were higher than usual, in some cases almost triple the average trading volume.
Industry watchers, however, appeared to play down the development, calling the sector sell-off little more than a "knee-jerk" reaction to the news.
Some even went out on a limb to say that the mad cow case could create a buying opportunity for restaurant stocks.
"We believe that the likely impact from this case of mad cow will be positive -- not negative -- for the restaurant names, " UBS analyst David Palmer wrote in a research report.
"The key reason for this are that the negative publicity will likely be fleeting, and therefore the consumer response minimal. Secondly, importers of US beef will likely ban our supply, which could send prices down 20 percent or more."
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Separately, CIBC World Markets said in a report that "buying on mad cow dips has been a successful strategy in past outbreaks."
"There are several cross-currents in the industry that can overpower this development if it remains an isolated case," said one analyst who did not want to be identified. "The Atkins diet [high-protein and meat-based] is very popular around the country, beef prices are higher by as much as 14 percent year-over-year at the retail level. With the rebound in the economy, consumers are trading up to beef from chicken and pork."
Nevertheless, others say it would take just one more reported case of an infected cow to change these opinions.
"The big question, and therefore question mark with respect to the industry impact, needing to be answered, is to what extent this may or may not be an isolated event," said Mat Johnson with the Quantit Economic Group.
--analysts quoted in the story do not own shares of the companies that they cover and their firms do not have an investment banking relationship with the companies mentioned in the story