Skip to main content

Market Overview

4 Takeaways Related To Chipotle's Food Safety Practices Probe

Share:
4 Takeaways Related To Chipotle's Food Safety Practices Probe

Credit Suisse held a conference call with food safety attorney, Shawn Stevens, on June 20 “to better understand the potential implications of the Federal investigations” into the food safety practices of Chipotle Mexican Grill, Inc. (NYSE: CMG)

Credit Suisse’s Jason West maintains an Outperform rating on the company, with a price target of $500.

The Impact

“Even with the help of an experienced food safety lawyer, predicting the outcome of this type of case is impossible. However, we came away with a better sense of why CMG is being criminally investigated and of the potential range of outcomes,” West mentioned.

The analyst believes the investigation would not have a meaningful negative impact for Chipotle Mexican Grill, apart from the significant brand damage that has already been caused.

Related Link: Jim Cramer Advises Viewers On Shake Shack, Del Taco And Chipotle

Key Takeaways

According to the Credit Suisse report, there were four key takeaways from the conference call.

    1. “Criminal investigations around food safety events are becoming more commonplace, tied to the new FDA mandate under the Food Safety Modernization Act (FSMA).”
    2. Stevens does not expect Chipotle Mexican Grill’s executives to be indicted, although the FDA and Department of Justice have been more aggressive about this issue in recent years.
    3. According to Stevens, the most likely outcome would be findings of gaps in food safety at the company, which would likely lead to a fine. The attorney also believes that such an outcome “would be unlikely to reignite consumer angst around the brand.”
    4. Although it is difficult to predict the timing of a resolution, the lawyer believes that that authorities are likely to look to closing the investigation before the final FSMA rules are implemented in September 2016.

Latest Ratings for CMG

DateFirmActionFromTo
Feb 2022Morgan StanleyMaintainsOverweight
Feb 2022Deutsche BankMaintainsHold
Feb 2022BarclaysMaintainsEqual-Weight

View More Analyst Ratings for CMG

View the Latest Analyst Ratings

 

Related Articles (CMG)

View Comments and Join the Discussion!

Posted-In: Credit SuisseAnalyst Color Long Ideas Reiteration Restaurants Analyst Ratings Trading Ideas General Best of Benzinga

Latest Ratings

StockFirmActionPT
SEDGB of A SecuritiesMaintains411.0
PTLOPiper SandlerMaintains28.0
AOUTLake StreetMaintains26.0
RAPTPiper SandlerMaintains52.0
OCXLake StreetMaintains6.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
SPAC
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com