- Chipotle faces several problems, from declining brand perceptions to the troubled rollout of its queso.
- The company is searching for a new CEO, which could help, but some analysts remain sceptical of the fast-casual chain.
- Watch Chipotle’s stock move in real time here.
Chipotle’s next CEO is going to inherit a ton of problems.
The company said in November that it is searching for a new CEO to replace Steve Ells, the founder of the chain, who will step down once the company finds a suitable person to fill the role. Ells will still remain at the company as an executive chairman.
Bittner has maintained the company’s “Perform” rating given that Chipotle has delivered $US1.9 million in sales per unit, which is still above average, despite lower-than-expected traffic in the last two years.
Yet he said that he needed to see more drastic changes from the company in order to push the shares sustainably higher. “The biggest catalyst we require is a line of sight into a meaningful earnings revision cycle,” Bittner said.
But UBS analyst Dennis Geiger said that he sees no salvation in sight for the fast food company, even with a new CEO. He said that perceptions of the brand remain low, and will not likely change soon, while competition will remain high and unit growth will stay low as the chain has to contend with sluggish same-store sales and depressed margins.
Geiger downgraded the stock to “Sell” from “Neutral.” He lowered his 12-month price target to $US290 per share from $US345 per share.
Chipotle’s stock was down 3.12% on Thursday afternoon at $US314.55 per share. It was up 7.41% for the year.