Tags: chipotle | subpoena | illnesses | stock | shares

Chipotle Plunges After Disclosing Subpoena Related to Illnesses

chipotle corporate logo symbol emblem on a computer screen

Mohamed Ahmed Soliman | Dreamstime.com

Thursday, 25 April 2019 11:31 AM EDT

Chipotle Mexican Grill Inc. said on Thursday it received another subpoena from U.S. federal prosecutors, seeking information related to an outbreak that left hundreds of people sick last year in one of its Ohio restaurant.

Chipotle shares (CMG) fell 5 percent following the disclosure and after analysts said they see limited valuation even as the company posted better-than-expected quarterly sales and profit on Wednesday.

“Its not a new incident but (the subpoena) is enough to shake off some of the more skittish bulls on the story,” said Maxim Group analyst Stephen Anderson.

Over the past three years, the burrito chain has faced a number of subpoenas regarding sicknesses linked to its restaurants following an E. Coli, salmonella and norovirus outbreaks at the company’s outlets dating back to late 2015 that affected hundreds across several states.

The latest subpoena is the fourth and is part of an ongoing criminal investigation being conducted by the U.S. Attorney’s office for the Central District of California.

Last August, a type of bacteria found in meat and pre-cooked food left at unsafe temperatures was responsible for making hundreds of people ill in a Powell, Ohio restaurant.

The subpoena, disclosed here in a regulatory filing on Thursday, sought information related to the incidents of illnesses associated with the Ohio restaurant and restaurants in California, Massachusetts, and Virginia, that were covered under previous subpoenas.

Wednesday’s results follow Chipotle’s efforts in ramping up promotions, adding new menu items, and extending its delivery options. It also launched a loyalty program to attract customers.

The upbeat results also prompted the company to raise its full-year comparable sales growth forecast to mid-to-high-single-digit, from the prior expectations of mid-single-digit growth.

“While the company upgraded their comp outlook, we believe Chipotle needs to continue to hit double-digit comps to justify the current multiple,” said Mizuho Securities analyst Jeremy Scott.

Chipotle trades 52.18 times its 12-month forward earnings, while Yum! Brands trades at 26.07 times and McDonalds’s trades 23.74 times.

Analysts also highlighted that higher commodity costs, loyalty redemptions, and rising food costs would hurt Chipotle’s margins.

Jefferies analyst Andy Barish said Chipotle is well-positioned with its initiatives and believes it is still in the early innings of its transition process.

“However, valuation keeps us at ‘hold’(rating),” he added.

© 2026 Thomson/Reuters. All rights reserved.


StreetTalk
Chipotle Mexican Grill Inc. plunged on Thursday after reporting it received a subpoena related to an outbreak of customer illnesses last year -- bringing a sensitive issue back into the spotlight for the burrito chain.
chipotle, subpoena, illnesses, stock, shares
375
2019-31-25
Thursday, 25 April 2019 11:31 AM
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