Take your pick, Wednesday, as there's a whole host of negative headlines and analyst actions to choose from, TheStreet's Jim Cramer said on CNBC's "Stop Trading" segment.
How about JPMorgan's negative commentary on General Electric (GE) - Get Report ? It talks about dividend cuts, exiting certain businesses and needing to borrow money for a pension funding. There's also Ulta Beauty (ULTA) - Get Report , which is sinking 2.1% after analysts at Piper Jaffray downgraded the stock to neutral from overweight and cut their price target to $210 from $260.
Nah. Let's go with Chipotle Mexican Grill (CMG) - Get Report , which is down almost 2% after Bank of America/Merrill Lynch analyst Gregory Francort cut the stock to underperform and lowered his price target to $285 from $390. While Chipotle has done a "very good job" managing labor costs, that task will become increasingly more difficult going forward, the analyst says.
Sales and margin pressure will make this problem even worse, the analyst reasons, adding that even though current quarter results may be "OK," guidance could disappoint. 2018 earnings could come under pressure thanks to rising labor costs.
- Chipotle's Stock Is at Risk From Surging Labor Costs
- General Electric May Need to Slash Its Hallowed Dividend, Jim Cramer Says
- McDonald's South Korean Offices Raided Over Complaints of Food-Related Illness
Unfortunately for Chipotle, it can't seem to keep the health-scare headlines away, said Cramer. It's latest issue surfaced in early summer, about 18 months after the prior one in December 2015. 18 months is the key number, as that's how long it generally takes for investors to put the event behind them and for business to fully recover.
Is the analyst being a bit too negative? Cramer said McDonald's (MCD) - Get Report faces higher labor costs, as do other fast-food and fast-casual companies. However, McDonald's stock doesn't seem to be having any trouble, he noted.
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At the time of publication, Cramer's Action Alerts PLUS had a position in GE.