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Chipotle: Analysts Raised Their Target Prices

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Analysts’ recommendations

After Chipotle Mexican Grill (CMG) posted better-than-expected first-quarter earnings on April 24, several analysts raised their target prices.

  • J.P. Morgan from $550 to $600
  • BMO from $540 to $675
  • SunTrust Robinson from $770 to $780
  • Wedbush from $680 to $700
  • Cowen and Company from $640 to $660
  • BTIG from $700 to $790
  • Piper Jaffray from $755 to $760

Among the 31 analysts covering Chipotle, 32.3% recommended a “buy,” 51.6% recommended a “hold,” and 16.1% recommended a “sell.” Analysts have set a 12-month target price of $670.42 for the stock, which represents a fall of 1.1% from its stock price of $678.07 on April 25.

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Peer comparisons

Among the 11 analysts covering Shake Shack (SHAK), 27.3% recommended a “buy,” 63.6% recommended a “hold,” and 9.1% recommended a “sell.” On average, analysts have given Shake Shack a 12-month target price of $52.44, which implies a potential fall of 13.8% from its stock price of $60.85.

Among the 30 analysts covering McDonald’s (MCD), 80% recommended a “buy,” while 20% recommended a “hold.” On average, analysts have given McDonald’s a 12-month target price of $202.04—a potential upside of 2.1% from its stock price of $197.93.

Valuation multiple

The discloser of the new subpoena from the U.S. District Court for the Central District of California related to foodborne illness in July 2018 appears to have led to a fall in Chipotle’s stock price, which lowered its valuation multiple. As of April 25, the company was trading at a forward PE ratio of 48.2x compared to 52.2x before the disclosure. In comparison, Shake Shack and McDonald’s were trading at forward PE ratios of 95.0x and 23.8x, respectively.

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