Long story short, the report wasn't good. The outlook isn't good. And almost all of the major analysts see this stock going lower; worst-case calls for a 16% drop, to $240.
Analysts aren't having it with Chipotle. A number of them were out Wednesday slashing their price targets. Canaccord went from $400 to $325, BMO from $330 to $275 and Jefferies from $350 to $300.
Barclays is not really feeling Chipotle either, going from $325 to $280; Morgan Stanley cut from $350 to $310; Deutsche Bank went from $250 to $240 -- that's about 16% downside from current levels. However, targets ranging from $275 to $310 imply that downside could be limited.
Investors will be hard-pressed to find a positive spin on the company's results Wednesday. JPMorgan analyst John Ivankoe said now is still not the time to buy Chipotle stock, despite the post-earnings decline as its turnaround plan faces headwinds. He has a neutral rating on the stock and slashed his $380 price target down to $315.
UBS analyst Dennis Geiger finds that Chipotle's sales trends remain volatile. It's now a "show me" story, despite having several initiatives in place to aid in the turnaround. The trends aren't promising and new restaurant guidance shows "increasing development uncertainty" and will lead to limited upside.
Telsey Advisory also downgraded Chipotle stock to market perform from outperform.
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It looked as if this once-darling diner was in the clear earlier this year. TheStreet's Jim Cramer had been consistent in saying it would take roughly 18 months for both investors and consumers to return to Chipotle. Given that its last illness issue surfaced in December 2015, that put Chipotle's stock resurgence in line for May or June of this year. Ironically, Chipotle stock peaked in mid-May at nearly $500 and his since plunged 40% to about $300. It had another food-related illness surface and now there's no telling when it will recover.
In the latest quarter, sales grew just 8.7% year-over-year to $1.13 billion, slightly missing analysts' estimates. Earnings per share of $1.46 missed estimates of $1.63. Comparable-store sales results increased just 1%, below estimates looking for a 1.2% gain.
For comparison, McDonald's (MCD) - Get McDonald's Corporation (MCD) Report just released earnings in which the company crushed its comp-store sales estimate of 4.5% with global comps of 6%. Cramer was highly complimentary of McDonald's CEO Steve Easterbrook, who continues to position his company at the front of the rebirth in fast-food stocks.
Meanwhile, Chipotle investors are losing patience. One more outbreak at could have severe consequences.
Chipotle's new queso side can't save its shares:
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This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.