Chipotle Foodborne Illness Saga Will Be Studied For 'Decades To Come,' JPMorgan Warns

• Shares of Chipotle Mexican Grill, Inc. CMG have declined 30.81 percent over the past three months, falling to $503 in morning trade on December 22.
• J.P. Morgan analysts have downgraded the rating on the company to Neutral, with a price target of $555.
• The CDC reported on December 21 that a “rare DNA fingerprint of Shiga toxin-producing E. coli” had been found in five people across three states, all of whom reported their illness from November 18 to 26.

According to the J.P. Morgan report, all five people with the illness also reported having eaten at one of the company’s outlets within a week before their ailment started.

“At this point, even rational and informed consumers could potentially be given reason to pause when choosing Chipotle over the plethora of fast casual competition in the marketplace,” the analysts said.

Initially, the E.coli scare was limited to the Pacific Northwest, with 43 stores being closed despite only 11 of them having actually been associated with the infections. The problem then spread across 9 states and 47 cases were confirmed to be Chipotle-related, although within a narrow time frame of October 19 to November 13.

“Comparing these 47 confirmed Chipotle cases to the 265,000 confirmed US E. coli cases annually and 48 million total foodborne illness cases seemed like a very small impact at the time,” the report stated.

However, the latest news means that the impact is continuing, with management “scrambling for answers.” The analysts believe that the “Chipotle foodborne illness case will now be studied by restaurant operators, financial professionals, and PR officials for years if not decades to come.”

The EPS estimates for F2016 and F2017 have been lowered from $15.83 to $14.02 and from $20.09 to $19.13, respectively.