Shares slumped 10 percent to $290 in premarket trading on
Wednesday.
At least nine brokerages, including Credit Suisse, cut their
price targets on Wednesday. Canaccord Genuity analyst Lynne
Collier was the most bearish on the stock, cutting her price
target by $75 to $325.
Chipotle has been struggling to recover from a bruising string
of food safety lapses that started in late 2015, including a
recent norovirus outbreak at a Virginia restaurant.
The company's stock has more than halved since touching a record
high in August 2015.
Chipotle has been working on training its employees on food
safety and is looking for new ways to boost sales, including
adding new items such as its spicy cheese Queso dip. It is also
testing frozen margaritas and desserts.
But, a five percent price hike announced on Tuesday by the
company could hit traffic to its restaurants in the near-term,
analysts said.
"Despite some sales lift from queso and pricing, we view this
result and outlook as disappointing, particularly for those
looking for a more meaningful recovery following multiple food
safety events," Credit Suisse analyst Jason West said in a
research note.
For the July-September quarter, Chipotle reported slightly
weaker-than-expected same-store sales and said it would open
fewer restaurants than previously anticipated.
Analysts said some of their confidence in the company's
turnaround was eroded after management opted not to share its
full-year same-store sales outlook for the next year, as it
traditionally does while reporting third-quarter results.
RBC analyst David Palmer said the lack of outlook is "leaving us
less confident that current initiatives are enough to support a
fuller recovery."
Of the 35 analysts covering the stock, 22 rate it a "hold," and
five analysts have a "sell" rating. The rest rate it "buy" or
higher.
The median price target on the stock is $325.58, down 15 percent
from just a month ago.
(Reporting by Siddharth Cavale and Sruthi Ramakrishnan in
Bengaluru; Editing by Sayantani Ghosh)
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