Analyst Paul Westra is doubling down on his bearish call on Chipotle Mexican Grill, Inc. following Bill Ackman’s revelation after the close on Monday that Pershing Square Holdings Ltd. had amassed a 9.9 percent stake in the stock.
Advertisement
In an SEC regulatory filing, Pershing said Chipotle had a “strong brand” and “visionary leadership”, and that its stock is “undervalued and is an attractive investment”. 1 analyst also believes that the downside risk to the stock is higher and suggests a Sell on Chipotle Mexican Grill (CMG).
Ackman intends to enter discussions with Chipotle’s management on the company’s business, operations, cost structure, assets, and others, according to the filing.
Receive News & Ratings Via Email – Enter your email address below to receive a concise daily summary of the latest news and analysts’ ratings with MarketBeat.com’s FREE daily email newsletter.
Four years ago David Einhorn, who runs Greenlight Capital and is widely followed, sent the company’s shares tumbling after saying he thought they were overvalued.
Industry analysts expect Ackman will likely focus on helping revamp Chipotle’s board, which has come under fire from shareholders for having served too long, lacking relevant skills and being too chummy with top management.
Biomarin (NASDAQ: BMRN) shares briefly gained more than 1 percent in extended trading after the company announced an update to its treatment program for children with a rare form of batten disease, a fatal neurodegenerative disorder which now has no approved treatments.
Chipotle has given away millions of free burritos and other menu items, including guacamole and chips, to revive sales growth after outbreaks of E. coli, salmonella and norovirus linked to its outlets previous year put off customers. It is chaired by Chipotle founder and co-CEO Steve Ells.
Although the shares have continued to plunge, Bill Ackman’s Chipotle investment sent stocks soaring on Tuesday in after-hours trading. We’ve seen Ackman try this role at J.C. Penney and Target, only to find that fixing consumer companies is harder than it looks.
Chipotle did not immediately respond to a request for comment early Wednesday.
In fact, since Ackman first started buying the stock about a month ago, he’s already made almost $80 million, according to Fortune’s back-of-the-envelope calculations. Institutional investors and hedge funds own 97.00% of the company’s stock.
He also is known for his tendency to make bold bets.
Advertisement
The idea is that if McDonald’s, once a majority owner of Chipotle before Chipotle grew up to become an archenemy, repurchased the Mexican chain, the burger giant would have a way to keep growing. The Company operates 1,755 restaurants in the United States, seven in Canada, six in England, three in France, and one in Germany.
