Updated from 9:45 a.m. EDT

McDonald's ( MCD) was making up some of the ground it lost in Tuesday's mad cow selloff after Lehman Brothers upgraded the shares to overweight.

The stock, which gave up about 6% Monday when reports broke that the disease had been discovered in a cow that died in Alberta, was recently up 37 cents, or 2.2%, to $17.32.

In its Tuesday morning note, Lehman said the mad cow scare was overdone, noting that the fast-food chain's U.S. outlets don't use Canadian beef, and in any event no human variant of the mad cow protein was discovered in Canada.

McDonald's itself put out a statement Tuesday night noting that its Canadian outlets buy beef only from federally inspected facilities in Canada, while its U.S. restaurants use no Canadian beef. The company said it "has the highest beef safety standards and will continue to strictly enforce them."

To that, Lehman added that the cow found in Canada was never in the food chain, and played down suspicions of a cover-up by Canadian officials by noting that while the cow was killed four months ago, the initial diagnosis was pneumonia.

"Typically, concerns over food-borne illness have proven to be opportunities," Lehman said. It pointed to a salmonella outbreak at Darden's Red Lobster chain and a listeria scare created by tainted food sold by Cheesecake Factory to Darden's Olive Garden as examples of this in the past.

More broadly, Lehman praised McDonald's new management for efforts to cut costs, and said a turnaround story is believable.

"Importantly, we believe McDonald's is fixable; while the brand image and store operations are still considered poor in the U.S., we highlight brands like Gap and Taco Bell that have demonstrated the ability to be revitalized under new management," Lehman wrote.

As originally published, this story contained an error. Please see Corrections and Clarifications.

More from Stocks

Tesla Model 3 Delivery Time Falls, but Will It Help the Stock?

Tesla Model 3 Delivery Time Falls, but Will It Help the Stock?

Baidu Stock Plummets After COO Qi Lu Resignation

Baidu Stock Plummets After COO Qi Lu Resignation

18 Top Stocks Hedge Funds Own That Goldman Sachs Thinks Will Keep Outperforming

18 Top Stocks Hedge Funds Own That Goldman Sachs Thinks Will Keep Outperforming

Dow Rises Sharply as U.S.-China Trade Tensions Thaw

Dow Rises Sharply as U.S.-China Trade Tensions Thaw

One Chart on Global Trade Conditions Should Make You Worried About Stocks

One Chart on Global Trade Conditions Should Make You Worried About Stocks