On Wednesday, Guggenheim updated its stance on Chipotle Mexican Grill (NYSE:CMG), raising the price target to $55.00 from the previous $54.50 while maintaining a Neutral rating on the stock. The firm adjusted its estimates to better align with the recent sales headwinds faced by the industry in June and July.
The full year 2024 earnings per share (EPS) estimate was increased by a penny, and now anticipates a one cent beat versus consensus in the second quarter, followed by two cent misses in both the third and fourth quarters.
The new price target of $55 reflects a modest uplift in the full-year estimate, applying a similar price-to-earnings (P/E) multiple and rolling it to 2025. The adjustment comes in the wake of Chipotle's shares significantly underperforming the market over the past month, with a 17% decline compared to the S&P 500's 2% increase.
The analyst pointed out that Chipotle has transitioned from experiencing positive sell-side earnings revisions to negative ones, even though the expectations have only modestly changed. The high valuation multiple of Chipotle's stock presents difficulties in establishing a valuation floor, especially in a market that is currently momentum-driven.
In other recent news, Chipotle Mexican Grill has reported a 7% increase in comparable sales growth and total sales of $2.7 billion in Q1 2024, with digital sales making up 37% of total sales. The company plans to open between 285 to 315 new restaurants throughout the year.
In leadership changes, Jack Hartung, the company's Chief Financial Officer, is set to retire on March 31, 2025, with Adam Rymer, the current Vice President of Finance, succeeding him as CFO starting January 1, 2025. Jamie McConnell will take on the role of Chief Accounting and Administrative Officer on the same date.
Several financial services firms have revised their stock price targets for Chipotle. Truist Securities lifted its price target to $74, projecting Q2 sales of $2.96 billion and an earnings per share (EPS) estimate for Q2 2024 of $0.33.
Stifel adjusted its price target to $70, citing robust traffic, while Baird raised its price target to $74, maintaining an Outperform rating. Lastly, Citi maintains a buy on Chipotle stock, reiterating a price target of $71.00, based on the company's operational efficiency and market position.
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