Chipotle Mexican Grill Stock (CMG) Falls Further as CDC Confirms Salmonella Outbreak

The stock of Chipotle Mexican Grill (CMG) is falling further after the U.S. Centers for Disease Control and Prevention (CDC) officially confirmed a salmonella outbreak linked to the company’s jalapeño peppers.

CMG stock is down 3% on Aug. 6 after federal health officials linked a multistate salmonella outbreak to jalapeño peppers served at the burrito chain. The latest decline brings losses for Chipotle’s stock to 12% in the past five trading sessions.

Officials with the CDC said 345 people in 27 states have been infected with the salmonella Javiana strain, and that 36 people have been hospitalized because of the foodborne illness. However, no deaths have been reported due to the outbreak at Chipotle locations.

Salmonella is basically food poisoning. It can lead to stomach pain, vomiting, diarrhea, and fever in people who are infected by the bacteria.

Chipotle’s restaurant count. Source: The Fly

Origins of the Outbreak

The CDC and the U.S. Food and Drug Administration (FDA) said they have traced the infected jalapeño peppers to a grower in Mexico, and distributor Coast Citrus Distributors. Of 191 patients interviewed, 93% said they had eaten at a Mexican-style restaurant before becoming ill, including Chipotle Mexican Grill.

Coast Citrus has agreed to recall the affected peppers and Chipotle began switching suppliers at affected restaurants on July 20 of this year. This is not the first food-safety crisis to impact Chipotle. The company lost considerable traffic at its store locations due to a similar foodborne illness outbreak a decade ago.

Is CMG Stock a Buy?

Chipotle’s stock has a consensus Strong Buy rating among 23 Wall Street analysts. That rating is based on 20 Buy and three Hold recommendations issued in the past three months. The average CMG price target of $44.73 implies 30% upside from current levels.