Chipotle says criminal investigation widens, sales plunge

Chipotle Mexican Grill’s stock climbed on Tuesday for a second consecutive day, ahead of the restaurant chain’s fourth-quarter report, on bets that the fallout from recent outbreaks of food-borne illness has been fully priced in.

Sales of established restaurants fell 14.6 percent in the fourth quarter.

Although Chipotle’s stock price increased on Monday, CNN reports that Wall Street is predicting a drop in its sales and profits for the first quarter of 2016. Chipotle said Tuesday it had received a subpoena that expands the scope of the criminal investigation.

More than 50 people across 14 US states were sickened in two E.coli outbreaks past year after eating at Chipotle’s outlets.

The norovirus outbreak linked to the Simi Valley, California, Chipotle restaurant sickened about 230 customers in August, according to public records obtained by Food Safety News.

With easing health concerns after CDC’s investigation of E.coli cases at CMG’s restaurants, and despite a related criminal probe, we raise our 12-month target price by $40 to $440. It has also said it plans to open stores at 3 p.m. local time on February 8 to hold meetings with employees to discuss changes concerning food-safety measures.

Chipotle sales totaled $997 million between October and December, down about 7% from the same period a year ago.

Chipotle said last month it was confident that the steps it had undertaken to tighten food safety would stop future food poisoning outbreaks. On average, 30 analysts polled by Thomson Reuters estimated earnings of $1.86 per share for the quarter.

The United States Centers for Disease Control and Prevention (CDC) announced on Monday that the two Shiga-toxin-producing Escheri coli outbreaks linked to Chipotle Mexican Grill, Inc. appear to be over. The Denver-based fast-food company said it had a profit of $2.17 per share.

The most recent analyst actions consisted of BofA/Merrill upgrade the stock on February 1 and Credit Agricole initiating coverage with an upgrade rating back in January. Most of those who became ill ate the same food items at Chipotle, the CDC said, but because of the way the menu is designed – with meat and vegetables that can be mixed and matched in many different forms – it can be hard to pin down the source of an outbreak.