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Analysts’ Favor a ‘Hold’ Rating for Chipotle Mexican Grill

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Aug. 14 2018, Updated 10:31 a.m. ET

Analysts’ recommendations

Of the 32 analysts that follow Chipotle Mexican Grill (CMG), 28.1% favor a “buy,” 62.5% favor a “hold,” and 9.4% recommend a “sell.” On July 31, Jefferies raised its rating to “buy” from “hold.”

On August 10, Chipotle was trading at $485.47 per share. On the same day, analysts set an average price target of $450.52, which represents a fall of 7.2% from its current stock price.

Since the announcement of Chipotle’s second-quarter earnings, Jefferies, UBS, BMO, Maxim, Stifel, SunTrust Robinson, Bernstein, Barclays, and Morgan Stanley have all raised their price targets. Jefferies has increased its price target from $400 to $550. 

Stifel raised its price target from $325 to $450, and Bernstein increased its price target from $500 to $560. Chipotle’s strong second-quarter earnings and measures adopted by the company’s management to drive its sales appear to have prompted analysts to raise their price targets.

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Peer comparisons

The price targets and return potential of Chipotle’s peers are as follows:

  • Shake Shack (SHAK): price target of $54.0 for a 4.6% fall from its current stock price of $56.58
  • McDonald’s (MCD): price target of $183.62 for return potential of 15.7% from $158.68

Analysts’ ratings

On August 10, Chipotle was trading at a forward PE (price-to-earnings) multiple of 45.8x compared to 42.9x before the announcement of its second-quarter earnings. On the same day, its peers Shake Shack and McDonald’s were trading at forward PE multiples of 83.5x and 19.8x, respectively.

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