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What Wall Street Recommends for Chipotle after Weak 3Q17 Earnings

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Oct. 31 2017, Updated 6:31 a.m. ET

Target price

As of October 26, Chipotle Mexican Grill (CMG) was trading at $281.52. On the same day, analysts are expecting the company’s stock price to reach $320.37 in the next 12 months, which represents a return potential of 13.8%.

Before the announcement of 3Q17 earnings, analysts forecasted the 12-month target price at $375.46. The lower-than-expected 3Q17 earnings and lowering of 2017 SSSG (same-store sales growth) guidance could have prompted analysts to lower their target price. After the announcement of 3Q17 earnings, several analysts lowered their target prices. RBC lowered its target price from $330 to $320, Cowen and Company cut its target price from $250 to $240, Credit Suisse lowered its target price from $320 to $275 while Barclays cut its target price from $325 to $280.

The stock prices and return potential for Chipotle’s peers are as follows.

  • Shake Shack (SHAK): a target price of $38.0 with a return potential of 6.0%
  • The Cheesecake Factory (CAKE): a target price of $47.47 with a return potential of 7.4%
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Analysts’ ratings

Of the 35 analysts who follow Chipotle, 20.0% are recommending “buy,” 65.7% are recommending “hold,” and 14.3% are recommending “sell.” After the announcement of 3Q17 earnings, Telsey Advisory Group downgraded the stock from “outperform” to “market perform.”

Currently, Chipotle is trading below analysts’ target price. However, this difference doesn’t mean an automatic “buy.” Investors carefully analyze the kinds of parameters we discussed in this series before making decisions.

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