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Why BTIG Lowered Its 3Q17 Estimates for Chipotle

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Oct. 4 2017, Updated 3:01 p.m. ET

Target price

Fearing a decline in sales due to the norovirus incident that occurred at a Chipotle Mexican Grill (CMG) restaurant in Sterling, Virginia, BTIG lowered its same-store sales growth (or SSSG) estimates for 3Q17.

On October 3, 2017, Peter Saleh, an analyst at BTIG, lowered his 3Q17 SSSG estimate from 3% to 0.5% and his EPS (earnings per share) estimate from $2.05 to $1.72. Despite the nationwide launch of Chipotle Queso on September 12, 2017, and the company’s aggressive marketing efforts, Saleh expects customers to have a negative view toward Chipotle due to the recent food safety issue.

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On average, analysts are expecting the company’s stock price to reach $377.77 in the next 12 months, which represents a return potential of 25.2%. On September 27, 2017, BMO cut its 12-month target price from $350 to $330. Of the 35 analysts that follow Chipotle, 22.9% are recommending a “buy,” 65.7% are favoring a “hold,” and 11.4% are favoring a “sell.”

Peer comparisons

Of the 11 analysts that follow Shake Shack (SHAK), 36.4% are recommending a “buy,” 45.5% are favoring a “hold,” and 18.2% are favoring a “sell.” In the next 12 months, analysts are expecting Shake Shack stock to reach $38.22, which represents a return potential of 15.3%.

Of the 21 analysts that follow the Cheesecake Factory (CAKE), 23.8% are recommending a “buy,” 71.4% are recommending a “hold,” and 9.5% are recommending a “sell.” In the next 12 months, analysts are expecting CAKE’s stock price to reach $48.20, which represents a return potential of 14.0%.

Next, we’ll look at the stock performance of Chipotle.

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