Chipotle may be headed for a 'slippery slope' as stock drops: Expert $CMG (via TradingNation)
the fast-casual chain, cutting its price target to $620 from $675 and saying higher pork prices due to global outbreaks of African swine fever could put pressure on margins. The action marked Chipotle's worst trading day in six months.
Now, despite the company's efforts to roll out new menu items, boost digital sales and drive more store traffic, some experts are expecting more pain ahead. Strategic Wealth Partners CEO Mark Tepper, for one, said that even if the African swine fever outbreaks don't represent actual food safety concerns like the ones that have slammed Chipotle shares in the past, the company isn't free from potential pain.
"It's going to drive up the protein costs for them, and the Street's already overly optimistic on their margins. They've seen a huge rebound in margins. And increasing costs are going to hurt their margins," Tepper said on CNBC's"They've also been on this massive promotion kick to drive more store traffic, which has really helped them to see some great results, but results like this diminish over time," he added.
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