Chipotle CEO apologizes for E. coli, norovirus outbreak

Chipotle Mexican Grill (CMG) founder and co-CEO Steve Ells apologized for the outbreak of E. coli that has sickened people in nine states, with the corporate mea culpa coming as Boston College hiked its count of students who reported eating at Chipotle and later being sickened by norovirus.

Ells says he is deeply sorry that people got sick. “The procedures we’re putting in place to eat are so above industry norms that we are going to be the safest place to eat”.

Marie Bragg, an obesity and food policy researcher at New York University, said of all the restaurant chains these incidents could have occurred in, it’s unsurprising that it was Chipotle, since the company is known for touting its use of fresh produce, which is at high risk for contaminants.

On the same day, Boston College increased the number of students who have reported feeling ill after a group of them ate at Chipotle from 120, to 141.

The norovirus was responsible for the illnesses, authorities said. The virus is highly contagious which is spread by poor hygiene, contaminated food and also contact with areas that are already contaminated. (NYSE:CMG) develops and operates Chipotle Mexican Grill restaurants, which serve a focused menu of burritos, tacos, burrito bowls (a burrito without the tortilla) and salads.

James Surowiecki of the New Yorker compares Chipotle to Jack-in-the-Box which still carries stigma over 20 years after a devastating and tragic outbreak. Since news of the E. coli link surfaced in October, Chipotle stock has dropped 11 percent.

The stock’s 50 day moving average price is $600.19 and its 200-day moving average price is $665.79.

During the last several months other analysts have commented on the company rating. One analyst has rated the stock with a sell rating, fourteen have assigned a hold rating and twenty have issued a buy rating to the stock. Even as the interest increased from 1,285,986 shares on November 13,2015 to 1,744,075 shares on November 30,2015, the days to cover came in at 1. Earnings are also expected to fall to between $2.45 and $2.85 per share for the quarter.

Is this a Buying Opportunity? . Wedbush lowered their FY2015 EPS estimates for Chipotle Mexican Grill in a research note issued on Monday, Zacks Investment Research reports. On a consensus basis this yields to an Overweight rating. The higher price target estimate for the stock has been calculated at $810 while the lower price target estimate is at $470.

A recent analyst activity consisted of Credit Suisse reiterating their Outperform stance on December 7. Bank of America’s price objective indicates a potential downside of 14.24% from the company’s previous close. The stock had previously closed at $548.01.