Analysts Favor ‘Hold’ Ratings ahead of Chipotle’s Q2 Earnings


Oct. 11 2020, Updated 12:28 p.m. ET

Price target

On July 17, Chipotle Mexican Grill (CMG) was trading at $452.54 per share. On the same day, analysts expected the company’s stock price to reach $416.70 in the next 12 months, which represents a fall of 7.9% from its current stock price.

From the graph below, we can see that the average price target has increased from $314.48 in April to the current $416.70. The strong first-quarter earnings and initiatives taken by the company’s management to drive its sales appear to have compelled analysts to raise their price targets.

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On July 16, Morgan Stanley increased its price target from $372.00 to $398.00. Jefferies raised its price target to $400.00 on July 12. Since the announcement of Chipotle’s first-quarter earnings, Mizuho, SunTrust Robinson, Wedbush, Cowen and Company, and Canaccord Genuity have all increased their price targets on its stock.

Analysts’ ratings

Of the 32 analysts that follow Chipotle, 25.0% recommend a “buy,” 65.6% recommend a “hold,” and 9.4% recommend a “sell.” On July 10, Mizuho had downgraded the stock from “neutral” to “underperform.”

Chipotle’s stock price is moving in tandem with analysts’ ratings. Currently, Chipotle is trading above analysts’ 12-month price target. However, this doesn’t mean an automatic “sell.” Investors are advised to study analysts’ estimates discussed in the previous article before making any investment decisions.

Peer comparisons

The target prices and return potential of Chipotle’s peers follow:

  • Shake Shack (SHAK) has a target price of $50.40, which represents a fall of 24.6% from its current stock price of $66.86.
  • The Cheesecake Factory (CAKE) has a target price of $53.43, which represents a fall of 6.5% from its current stock price of $57.13.

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