On August 16, 2016, Chipotle Mexican Grill’s (CMG) stock was trading at $400.90. The current price may have already factored in the estimates we’ve looked at in this series. In this part of the series, we’ll look at analysts’ recommendations and target prices for the stock over the next 12 months.
Despite food safety measure implementation and huge spending on marketing and promotional programs, analysts believe the revival in Chipotle’s same-store sales growth will take more time than expected. This may have prompted analysts to lower their target price from $445.20 to $435.20. The new estimate represents a return potential of 8.6%.
Nicole Miller Regan of Piper Jaffray, who is more optimistic about the stock, expects the share price to touch $590 in the next 12 months, which represents a return potential of 47.2%. On the lower side, Paul L. Westra of Stifel has forecast the share price will touch $215, which represents a fall of 46.3%.
The 12-month target prices for Chipotle’s peers are as follows:
According to a Bloomberg survey of 35 analysts, 34.3% gave Chipotle “buy” recommendations, 48.6% gave it “hold” recommendations, and 17.1% gave it “sell” recommendations. Chipotle’s share price moves in tandem with analysts’ recommendations. As analysts raise their 12-month target prices, Chipotle’s share price should also rise, and vice versa.
Chipotle’s stock is trading lower than its target price. This doesn’t mean an automatic “buy,” though. Before investing, you should carefully analyze the various factors we’ve covered in this series.