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What to Expect from Chipotle’s 2Q17 Earnings

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Part 6
What to Expect from Chipotle’s 2Q17 Earnings PART 6 OF 6

How Analysts View Chipotle before Its 2Q17 Earnings

Target price

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.

How Analysts View Chipotle before Its 2Q17 Earnings

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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%

Analysts’ ratings

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.

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