Analyst Slashes Chipotle Stock Target, Casts Doubt on Menu Price Hikes
LOS ANGELES (Reuters) - Shares in Chipotle Mexican Grill Inc (NYSE:CMG - News) continued losing ground on Monday, after Credit Suisse chopped its price target by $100 and raised doubts about whether the burrito chain can raise menu prices to offset higher costs.
Shares in the chain shed nearly 13 percent of their value last week on reports of a Norovirus outbreak at a restaurant in Sterling, Virginia, and mice in a Dallas eatery. They were off another 0.9 percent at $342.24 in midday trading on Monday after touching $336.65, their lowest intraday level since April 2013.
"We believe the recent negative headlines may delay price increases. We now assume no additional menu pricing in 2018," Credit Suisse analyst Jason West said in a client note where he cut the chain's price target to $325 from $425.
West said ongoing challenges at the company, which is fighting to revive sales following a string of food safety lapses in late 2015, could also force it to trim plans for new restaurant openings.
The formerly high-flying and fast-growing chain will report second quarter results after the market close on Tuesday, July 25.