Shares of the popular burrito chain get pummeled after it warned sales could plunge amid the E. coli outbreak. Fred Katayama reports.
Chipotle shares slammed by ratings downgrades and steep price target cuts Monday. The comes after the burrito chain warned Friday its comparable sales could drop as much as 11 percent in the fourth quarter. The chain is reeling from the E. coli outbreak that has now spread to nine states. Cowen and Guggenheim Securities downgraded the shares to neutral from buy. Cowen analyst Andrew Charles axed his price target by $260 to $515, warning that the recovery could take longer than expected. He said, "Our concern is that Chipotle's recovery occurs in the backdrop of a slower-than-expected sales environment in 2015." Shares had tumbled when Chipotle earlier warned for the first time about slowing sales back in October. Coupled with news in November of the E. coli outbreak, the one-time stock market darling is now down more than 20 percent since the sales warning. Chipotle prides itself on using antibiotic-free meat and removing genetically modified organisms. But experts say the focus on fresh unprocessed food raises the risk of foodborne illness. Investigators still don't know what caused the outbreak, and they warn it could widen again.