On June 4, Peter Saleh of BTIG raised Chipotle Mexican Grill’s (CMG) target price from $460 to $500 and maintained a “buy” rating. The new target price represents a return potential of 12.7% from Chipotle’s current stock price.
Saleh stated that the turnaround is progressing well. He expects improving sales and declining labor expenses to boost Chipotle’s margin.
Other analysts’ recommendations
Of the 32 analysts that follow Chipotle, 25.0% recommend a “buy,” 68.8% recommend a “hold,” and 6.3% recommend a “sell.” On average, analysts expect the company’s stock price to reach $383.38 in next 12 months—a fall of 13.6% from the current stock price.
In the first quarter, Chipotle posted strong same-store sales growth and a better-than-expected EPS, which appears to have prompted analysts to raise their target price. Since the announcement of Chipotle’s first-quarter earnings, Maxim, UBS, JPMorgan Chase, Stifel, Guggenheim, Stephens, and SunTrust Robinson have all raised their target prices.
Chipotle’s stock price moves in tandem with analysts’ estimates. When analysts raise their target price, the company’s stock price increases and vice versa. Although Chipotle is trading above analysts’ 12-month target price, it doesn’t mean an automatic “sell.” Investors are advised to review analysts’ estimates, discussed in Part 2 of this series, before making any investment decisions.
The target price and return potential of Chipotle’s peers are:
- Shake Shack (SHAK): target price of $49.80, which represents a fall of 19.3% from its current stock price
- The Cheesecake Factory (CAKE): target price of $52.10, which represents a fall of 1.3% from its current stock price
Next, we’ll discuss Chipotle’s stock performance.