Chipotle Mexican Grill, Inc.’s (NYSE:CMG) stock price along with its reputation has been severely hurt because of the outbreak of E. Coli and norovirus at its outlets, which affected the health of over 170 customers.
The management at the fast casual restaurant chain noted that its revenue dropped as much as 20% after the initial E. Coli outbreak and said that it could no longer forecast the sales for the year 2016. However, before withdrawing its guidance for the next year, the company had projected comparable store sales for 2016 to rise at a low single-digit pace.
Following this, the analysts at Argus are curbing their estimates for 2016 Earnings per Share (EPS) from $18.20 to $10.40, meanwhile, setting a 2017 forecast of $15.50.
Moreover, the analysts mentioned that if the management at Chipotle Mexican Grill was able to quickly address the current food safety crisis along with working on restoring consumer confidence, they would consider bringing the stock to the sell-side firm’s Buy list.
There are about 33 investment firms at New York’s Wall Street which provide coverage on Chipotle Mexican Grill stock. Out of these 33 sell-side firms, 12 are very bullish on the stock and believe that taking a long position on the stock would add diversity to the portfolio and also reap great financial benefits. 19 analysts suggest the shareholders to Hold the stock, while the remaining two analysts advocate shareholders to take a short position on the stock as they see potential downside. The 12-month consensus price on the stock is $477.83, which translates into a downside potential of 7.5%.
Chipotle Mexican Grill stock is trading at $516.15, down about 1.70%, as of 12:14 PM EST. Up till now this year, the stock has gained back an upside momentum by adding 7.81% to its value over the period. The stock has outperformed the loss of S&P 500 Index of 6.62% over the same time period.