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Fallout of E. coli incidents still plaguing Chipotle

Shares in Chipotle Mexican Grill are still falling due to E. coli incidents in nine states, and it's likely shares won't rebound any time soon, according to Goldman Sachs.

December 8, 2015

Shares in Chipotle Mexican Grill are still falling due to its customers suffering from E. coli in up to nine states, and shares won't be coming back up any time soon, according to Goldman Sachs. The bad  news doesn't stop there, however. The Boston College men's basketball team canceled practice Monday after several members became ill. Apparently, eight of those players were known to have E. coli, and the school's senior director of sports medicine told all Boston College athletes to avoid eating at a local Chipotle restaurant because of the E. coli risk.

Monday, Chipotle submitted a filing to the Securities and Exchange Commission, which included a forecast of a drop in same-store sales between 8 to 11 percent for Q4, its first drop since it went public nine years ago.

Goldman Sachs said Chipotle's sales dropped 16 percent over the last five trading days, "worse than feared, as we expect near-term weakness in the stock." It also expects comparable sales to be down 10 percent in the fourth quarter, which "implies a very minimal recovery" from the current downward trend.

Goldman also said: "We also believe the shares now price in an extremely bearish view of the long-term growth opportunity."

Goldman cut its fiscal year 2015 to 2017 earnings per share estimates to $15.58 for this year, $17 for next year, and $21.94 for 2017, down from $16.62, $19.03, $24.46, respectively.

RBC Capital reduced its price target on Chipotle's shares to $575 from $825, but kept its "outperform" rating on the shares. It expects a sales rebound in the second half of 2016, according to Fox.