Chipotle shares have begun to bounce back from their low-point below $400 in January, but not everyone is willing to forgive the burrito chain for its series of outbreaks late last year.
Analysts at Deutsche Bank have downgraded Chipotle (CMG) stock to “sell,” writing that they’re skeptical that Chipotle will be able to recover as well as it claims from the food safety scandals that rocked the company, Bloomberg reported. In August, Chipotle was riding high at $758 per share. Currently, shares are at $528.
In a note to investors, Deutsche Bank’s Karen Short wrote:
We question why Chipotle of today should be valued like Chipotle of yesterday…We still question what a recovery will look like (and when it will materialize). While management has been proactive—putting in place new food safety prep and procedures (in its supply chain and unit-level), and new marketing and compensation programs to regain consistency and customer trust, there is tremendous uncertainty on how well they will be received.
Chipotle sales dropped almost 15% in its final quarter. In response to the outbreaks, Chipotle has said it would be doubling down on food safety and “go well beyond industry standards.” While the E. Coli outbreaks are over, the company is now facing a federal probe into its food safety practices.