Barclays Sees Headwinds At Chipotle 'Large,' Cuts Target To $465

Shares of Chipotle Mexican Grill, Inc. CMG continued hitting new 52-week lows Thursday morning as Wall Street analysts continue to shy away from the stock. Jeffrey Bernstein of Barclays was the latest Wall Street analyst to turn incrementally bearish. The analyst maintained a Neutral rating on the stock on Wednesday with a "large" reduction in his price target to $465 from a previous $540. Bernstein noted that back in 2013, the investment case for Chipotle was "clear-cut" as the company was "believed to be the best growth story in restaurants." The analyst continued that the story shifted in 2015 as it was "difficult" to sustain the "fundamental momentum." Bernstein argued that Chipotle's investment case has changed given ongoing "headwinds" such as the recent E. coli, Norovirus, and "outsized" media and social attention on food safety which is weighing on the company's comps. "We struggle to assume meaningful stock outperformance, especially as there is no line of sight into a re-acceleration of top or bottom line growth," Bernstein wrote. Finally, Bernstein pointed out that shares of Chipotle are trading at approximately 33x forward P/E, versus its 3 year range of 27-47x and a 37x average. A revised $465 price target is based on an approximate 30x multiple on 2017 EPS of $15.50. The analyst's prior price target of $540 was based on a similar 30x multiple but on his 2016 EPS estimate of $17.75.