After the close on Friday, Chipotle slashed numbers due to ecoli concerns. I warned that the brand was in the proces of being McDonald’d. After viewing the sheer, unadulterated, hatred in CMG’s analyst reports this morning, it’s safe to say the love affair between the burrito clowns and Wall Street is over.
Here is a summary of this morning’s notes.
Chipotle Mexican Grill: Color on warning following E. coli incident
Maxim Group lowers their CMG tgt to $495 from $585 as the scope of the E. coli outbreak has expanded to more states. Late Friday, management warned of negative 4Q15E (December) comps and withdrew comp guidance for 2016E after the Centers for Disease Control (CDC) warned earlier in the day that the E. coli outbreak had expanded to three additional states. They now believe that a return to positive comps is unlikely before 2H16E, and they argue that heightened top-line uncertainty and higher compliance costs warrant a further reduction in multiples.
RBC Capital Mkts lowers their CMG tgt to $575 from $825 reflecting the impact of the recent E. Coli outbreak. Firm’s new base case assumes a back-half weighted sales recovery in 2016. However, in a downside scenario firm foresees a high-single digit SSS decline, with a modest rebound in 2017.
Guggenheim downgrades to Neutral.Cowen downgrades to Market Perform
CMG is off $50 in pre-market trade, or 9.1%.
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Dr. Fly – on a personal level, do you think you’ll ever again set foot in another CMG? I can’t imagine the lovely Mrs.Fly would be too keen on the idea right now…
Mrs. Fly will not go. I have a stomach made from steel and would go again.
More news on Chipotle: here, here, and here.
Sad part is you can buy and hold MCD because their food only kills you slowly. Not in the sensational way CMG does. As my grandmother used to say, “they got too big for their britches”