How Analysts View Chipotle before Its 2Q17 Earnings
On July 13, 2017, Chipotle Mexican Grill (CMG) was trading at $400.04, which might have factored in analysts’ estimates that we have discussed previously in this series. In this article, we’ll look at analysts’ target price and their recommendations.
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Despite the recent fall in Chipotle’s stock price, analysts expect the company’s stock price to reach an average of $449.07 in the next 12 months. This estimate represents a potential return of 12.3% from its current stock price.
The target price and potential returns of Chipotle’s peers are as follows:
- Shake Shack (SHAK) – $38.80 with a potential return of 10.1%
- Cheesecake Factory (CAKE) –$57.53 with a potential return of 15.4%
Of the 34 analysts that follow Chipotle (CMG), 26.5% recommended a “buy,” 58.8% recommended a “hold,” and 14.7% recommended a “sell.”
On June 20, 2017, Mark Kalinowski of Nomura-Instinet lowered his EPS estimate from $8.75 to $8.30 for 2017 and from $12.75 to $12.00 for 2018. This change occurred after Chipotle’s management announced that it is expecting a rise in its marketing and promotional expenditure in 2Q17.
Kalinowski also cut his target price for the company from $510.00 to $480.00 The new target price represents a return potential of 20.0% from its current stock price.
In June 2017, Jake Bartlett of SunTrust Robinson Humphrey lowered his target price for the stock from $550.00 to $530.00. Bartlett lowered his same-store sales growth estimates for 2Q17 to 9.0% from his earlier estimate of 12.0%.
Chipotle stock moves in tandem with analysts’ estimates. When they raise their estimates, the stock price tends to increase and vice versa. A target price that is greater than the current stock price does not mean an automatic “buy.” One should carefully analyze a variety of parameters before making any investment decisions.