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Chipotle's Same-Store Sales Targets May Be History After Horrendous Week

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Chipotle's Same-Store Sales Targets May Be History After Horrendous Week

Bill Ackman may not be bothered by Chipotle Mexican Grill, Inc. (NYSE: CMG)’s latest wave of negative food safety headlines, but other Chipotle customers may not be as quick to forgive. This week reports that Chipotle shut down one Virginia restaurant after customers became ill and an online viral video of rats inside another Chipotle restaurant in Texas have the company’s stock down more than 12 percent on the week.

For investor Bill Ackman, a picture is worth a thousand words. Ackman demonstrated his support for Chipotle this week by tweeting a photo of himself eating at Chipotle. Unfortunately, Wall Street analysts are taking Chipotle’s issues much more seriously.

After several analysts discussed the negative impact the latest headlines will have on Chipotle’s business earlier this week, Nomura became the latest firm to weigh in on the Chipotle mess on Friday.

“Given Chipotle’s late 2015 challenges with health-related issues and the media (and social media) attention that this newest item appears to be gathering, we believe it prudent at this time to take a more cautious outlook about Chipotle’s same-store sales and earnings trends,” Nomura wrote on Friday.

Related Link: Wall Street Isn't Happy With Chipotle's Latest Food Safety Scare

The firm cut its full-year 2017 EPS forecast from $8.30 to $7.65 and its 2018 EPS forecast from $12.00 to $11.00. In addition, the firm cut its price target for the stock by nearly $100 per share, from $480 to $385.

Investors are hoping the most recent food safety headlines blow over much quicker than the incidents in 2015, which dragged on for months and impacted sales numbers for several quarters.

Prior to the restaurant closing, Chipotle reiterated its full-year same-store sales target for the year on June 19. In light of Chipotle’s horrible week, that target now looks like a long shot at best.

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Image Credit: By Mjs92984 (Own work) [CC BY-SA 4.0 (http://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia Commons

Latest Ratings for CMG

DateFirmActionFromTo
Sep 2019UpgradesNeutralOutperform
Aug 2019MaintainsOverweight
Aug 2019MaintainsBuy

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