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Can Chipotle Mexican Grill Bounce Back in 3Q17?

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Part 6
Can Chipotle Mexican Grill Bounce Back in 3Q17? PART 6 OF 6

Why Analysts Favor a ‘Hold’ for Chipotle ahead of 3Q17 Earnings

Target price

As of October 11, 2017, Chipotle Mexican Grill (CMG) was trading at $311.49. Analysts are expecting CMG stock to reach $375.46 in the next 12 months, which represents a return potential of 20.5%.

Why Analysts Favor a &#8216;Hold&#8217; for Chipotle ahead of 3Q17 Earnings

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The recent food safety issues, lower-than-expected 2Q17 SSSG (same-store sales growth), and a weak response by customers to the nationwide launch of queso may have prompted analysts to lower their 12-month target prices. Since Chipotle announced its 2Q17 earnings, many analysts have cut their target prices. On September 27, 2017, BMO Capital Markets lowered its target price to $330 from $350. On September 8, 2017, Cowen lowered its target price for Chipotle from $370 to $250 and downgraded the stock from “market perform” to “underperform.”

Analysts’ ratings

Of the 35 analysts that follow Chipotle, 20.5% are recommending a “buy,” 65.7% are recommending a “hold,” and 11.4% are recommending a “sell.” A current stock price that’s lower than analysts’ target price doesn’t mean an automatic “buy.” We should analyze various analysts’ estimates covered in the previous articles before making any investment decisions.

Peer comparisons

Of the 11 analysts that follow Shake Shack (SHAK), 36.4% are recommending a “buy,” 45.5% are recommending a “hold,” and 18.2% are recommending a “sell.” In the next 12 months, analysts are expecting Shake Shack stock to reach $38.22, which represents a return potential of 14.5%.

Of the 21 analysts that follow The Cheesecake Factory (CAKE), 23.8% are recommending a “buy,” 71.4% are recommending a “hold,” and 4.8% are recommending a “sell.” Analysts expect CAKE stock to reach $48 in the next 12 months, which represents a return potential of 13.6%.

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