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Analysts Favor a ‘Hold’ Rating for Chipotle ahead of Q1 Earnings

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Analysts’ recommendations

Of the total 31 analysts that cover Chipotle Mexican Grill (CMG), 32.3% have given the stock a “buy” rating, while 51.6% are favoring a “hold,” and 16.1% are recommending a “sell” rating. Analysts have given the company a 12-month price target of $591.08, which represents a fall of 17.0% from its stock price of $712.27 on April 15.

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Since the beginning of March, Piper Jaffray, BTIG, Argus, Wedbush, Stifel, and Jefferies have all raised their price targets on the stock. BTIG has increased its price target from $620 to $700, Wedbush has raised its price target from $500 to $640, Stifel has raised its price from $500 to $700, and Piper Jaffray has hiked its price target to $755. On April 11, Jefferies downgraded the stock to “hold” from “buy,” but raised its price target from $600 to $700.

Peer comparisons

Of the total 11 analysts covering Shake Shack (SHAK), 36.4% are favoring a “buy” rating, while 54.5% have given the stock a “hold” rating, and 9.1% have given it a “sell” recommendation. Analysts’ 12-month price target for Shake Shack stands at $52.30, implying a fall of 12.6% from its stock price of $59.85.

Of the total 29 analysts that cover McDonald’s (MCD), 79.3% have given the stock a “buy” rating, while 20.7% are favoring a “hold.” Analysts have given McDonald’s a 12-month price target of $199.64, implying an upside potential of 4.1% from its stock price of $191.85.

Valuation multiple

The surge in Chipotle’s stock price since the announcement of its fourth-quarter earnings on February 6 has also raised its valuation multiple. As of April 15, the company was trading at a forward PE multiple of 53.5x compared to 42.6x before the announcement of its fourth-quarter earnings. On April 15, peers Shake Shack and McDonald’s were trading at a forward PE multiple of 93.8x and 23.1x, respectively.

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