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Some on Wall Street are getting sick and tired of Chipotle Mexican Grill and its food issues.
On Tuesday, 24 hours after the Denver-based chain was forced to deal with yet another outbreak of E. coli sickening its customers, shares sank 5.1 percent, to $495.62, a 23-month low.
“Even rational and informed consumers could potentially be given reason to pause when choosing Chipotle,” JPMorgan analyst John Ivankoe wrote in a research note on Tuesday.
JPMorgan downgraded Chipotle to neutral from overweight and predicted that Chipotle’s losses will be even greater than the 8 percent to 11 percent decline in fourth-quarter same-store sales the company predicted in early December.
“We are no longer comfortable recommending the stock,” wrote Ivankoe.
The negative view on Chipotle joins two other analysts down on the chain.
On Nov. 23, Sterne Agee’s Lynne Collier lowered her rating to neutral from buy. Last week, Argus Research’s John Staszak also took his rating down to hold from buy.
Chipotle’s shares have fallen 30 percent since their peak in August. The lack of Wall Street support could erode its share price further.
“We plan to make additional adjustments to our [Chipotle] model,” wrote Morningstar strategist R.J. Hottovy. “We now believe mid-to-high teens comp declines are possible in the fourth quarter.”
The latest report from the Centers for Disease Control and Prevention on Monday revealed that five people in North Dakota, Oklahoma and Kansas contracted E. coli from Nov. 18 to Nov. 26 after eating at a Chipotle restaurant. It was a different strain of the bacteria than the one that had infected 53 people in nine states in October and November.
Industry experts who advise restaurants on food-borne illnesses say there is a chance that Chipotle may have to close all or most of its 1,900 stores temporarily if these problems persist.
“Chipotle could be facing additional liability or legal exposure by staying open if the source of illness is continuous,” said Shawn Stevens of FoodIndustry Counsel. “A plaintiff’s lawyer could argue that Chipotle could have prevented illnesses if they closed their stores.”


