Chipotle Mexican Grill (NYSE: CMG) investors are coming up on an important anniversary they’d happily forget. Chipotle management has had nearly two years to right the ship since the beginning of its 2015 E. coli outbreaks, but a pair of Wall Street analysts say the stock remains untouchable.
On Tuesday, Deutsche Bank analyst Brett Levy reiterated a “sell” rating on Chipotle stock and says regaining the company’s prior sales growth momentum is proving more difficult than investors had hoped.
“As we are approaching the two-year anniversary of the 4Q15 (and subsequent) store closings, the results have been mixed in terms of sales growth, profit recovery, brand perception and share price performance,” Levy says in a statement.
Unfortunately for Chipotle bulls, Levy says there may simply be nothing management can do at this point to get the stock back to where it was.
“We applaud management for many of the moves it has made (adding executive talent, refocusing on in-store operations, marketing, menu tests, technology, etc.) and admit their hard work and current wave of initiatives may pay dividends over time,” he says.
In the meantime, there are simply too many unanswered questions and risks for investors to buy the stock, Levy says.
Chipotle’s stock lost appeal to growth investors when sales stalled in the second half of 2015. Unfortunately, even with the stock down nearly 60 percent since late 2015 and another 18 percent year-to-date in 2017, Oppenheimer analyst Brian Bittner says it’s still too early to declare CMG a value at its current price.
“Following a 36-percent slide since June, CMG’s risk-reward exhibits better balance … but we remain unable to recommend shares,” Bittner says, according to Barron’s.
Before recommending the stock, Oppenheimer is waiting to see “an out-year EPS view above consensus at an attractive valuation.”
Oppenheimer maintains…
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