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More bad news for Chipotle as shares sink to three-year low

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By Doug Zanger, Americas Editor

June 14, 2016 | 2 min read

A foodborne illness outbreak, slipping sales and, recently, losing its grip as the top Mexican chain in the US are just a few of Chipotle’s low-water marks in the past year. It was reported that another domino fell in the Denver-based brand’s story — a stock price trading at its lowest point in nearly three years.

Deutsche Bank analyst Brett Levy, in a note yesterday, said that the E. Coli outbreak might have permanently scarred the chain and that “some of these customers may be lost for good.” The stock closed down 2.8 per cent to $393.75 on Monday and is down 35 per cent in the past year. Levy lowered the company’s price target in 2017 to $340, down $20.

The outbreak, combined with a lukewarm PR redemption attempt was a major sign of trouble at the onset — but it continued with sluggish sales, menu fatigue and Moe’s Southwest Grill taking the top spot in a recent Harris Poll (Chipotle tumbled to fifth). A Civicscience brand survey added more misery as the number of diners who “don’t like” the brand jumped from 18 to 24 per cent year-over-year in Q2.

The outlook continues to be bleak with Hedgeye’s Howard Penney telling the New York Post that “There’s going to be a permanent group of people who won’t go back. And even after three years, when Chipotle may see some improvement, their competition will have improved by then, too. They may have had their run.”

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