Chipotle Boston College Timeline Might Not Make Sense, But Downside Risks Killing Investors

• Local and national media outlets reported that members of Boston College's basketball team became ill after dining at a Chipotle Mexican Grill, Inc. (NYSE: CMG).
• Analysts at Bernstein questioned the timeline of the report – as the reports imply a shorter time frame from exposure to development of symptoms.
• Nevertheless, Wall Street analysts are almost unanimous in acknowledging near-term risk but are mixed when it comes to the longer-term.

Boston based media sources reported that several of its basketball players were among 30 students who became ill and showed symptoms of E. coli. The one common theme: the students ate at a Chipotle Mexican Grill restaurant in Cleveland Circle.

WCVB, ABC's Boston based affiliate TV station, quoted a statement from Chipotle in which it confirmed the restaurant in question has been closed. However, the company added that it does not have any evidence to suggest the illness is related to any of the previous E. Coli outbreaks.

"There are no confirmed cases of E. Coli connected to Chipotle in Massachusetts," the company also said.

Bernstein: Timeline Doesn't Make Sense

Sara Senatore commented in a note on Tuesday that the timeline of the Boston outbreak "appears very accelerated." The analyst noted the typical incubation period (i.e., time from exposure to the development of symptoms) is approximately three to four days, while the reports from Boston imply a shorter time period – perhaps less than one day.

Related Link: Wall Street Mixed On Chipotle: More Educated Customer Base And Food With Integrity Branding Complicates

Nevertheless, Senatore said the "compounding impact of the media coverage" will continue to weigh on Chipotle's comps – even if the outbreak is unrelated to Chipotle. The analyst added that when the "steady drumbeat" of E. coli news does end, the company's comps will stabilize and re-accelerate at that time.

Finally, Senatore argued that Chipotle's stock is trading at the low end of its historical valuation range (31x, or 1.8x NTM relative to the S&P 500), suggesting that the risk-to-reward profile is "attractive" for investors with a multi-quarter time horizon.

Shares remain Outperform rated with an unchanged $730 price target.

Bank Of America: Revised Estimates Could Be ‘High' IF Reaction To Boston News Is ‘Severe'

Joseph Buckley commented in a note on Monday that it is initially "unclear" if the recent E. coli outbreak in Boston is related to Chipotle. Nevertheless, the analyst revised his fourth quarter earnings per share estimate to $2.75 from a prior $3.76 and also slashed his full year fiscal 2015 earnings per share estimate to $15.67 from $16.68.

Buckley expects "heavy" media coverage to continue following the reports out of Boston. In fact, the analyst suggested his revised estimates could prove to be "high" if consumer reaction to the Boston College news reports is "severe."

Shares remain Underperform rated with an unchanged $470 price target.