Bernstein raises Chipotle stock price target to $65 from $60

On Friday, Bernstein SocGen Group increased the price target on Chipotle Mexican Grill (NYSE:CMG) shares from $60.00 to $65.00, while maintaining an Outperform rating. The adjustment follows Chipotle’s stock decline of approximately 20% from its recent high, marking its first negative same-store sales growth (SSSG) quarter since the e.Coli crisis. According to InvestingPro data, CMG currently trades at a P/E ratio of 44.4x, with a market capitalization of $68.2 billion. InvestingPro’s Fair Value analysis suggests the stock is currently fairly valued. Bernstein’s analyst Danilo Gargiulo addressed the primary concerns of investors who believe Chipotle is moving towards slower growth and deserves a lower valuation.

Gargiulo refuted the argument that Chipotle will lose market share to quick-service restaurants (QSRs), emphasizing that Chipotle has kept its pricing discipline. According to the analysis, Chipotle’s prices are 15-20% cheaper than those of other brands, which should help it maintain market share despite a competitive promotional environment. InvestingPro data shows the company maintains a healthy gross profit margin of 40.3% and achieved revenue growth of 12.6% in the last twelve months, demonstrating strong operational efficiency. The analyst also pointed out that on a two-year basis, Chipotle’s performance is expected to bottom out in the first quarter of 2025, with a recovery anticipated in the second quarter. This projection is based on the company’s summer marketing investments and ongoing initiatives to increase store throughput, along with an additional limited-time offer (LTO) on the calendar.

Bernstein also addressed the concern that Chipotle’s future looks uncertain with no immediate catalysts to counteract a slower macroeconomic environment. Gargiulo suggested that the market is too focused on the previous quarter, which was impacted by severe weather and macro uncertainty, and is overlooking the potential for a sales turnaround and earnings per share (EPS) growth.

The analyst concluded by comparing Chipotle’s valuation to the S&P 500, noting that the stock is rarely as inexpensive as it is currently, relative to the index. Bernstein holds the view that the long-term growth algorithm for Chipotle has not been impaired, and the firm anticipates a sales inflection and multiple re-rating to occur more rapidly than the market expects.

In other recent news, Chipotle Mexican Grill has announced several key developments. The company appointed Jason Kidd as the new Chief Operating Officer, effective May 19, to enhance its executive team. Kidd joins from Taco Bell and brings extensive experience in operations and retail. Additionally, Chipotle revealed that Jack Hartung will transition from his role as President and Chief Strategy Officer to become a senior advisor until early March 2026.

In terms of financial performance, Chipotle’s first-quarter 2025 results showed a decrease in same-store sales by 0.4%, falling short of expectations. Following these results, Guggenheim Securities adjusted Chipotle’s stock price target to $47 while maintaining a Neutral rating. UBS also revised its price target to $60, retaining a Buy rating, acknowledging better-than-expected margins and robust restaurant development. Stifel maintained a Buy rating with a $65 target, noting Chipotle’s proactive marketing strategies to address softer consumer spending.

Bernstein reiterated an Outperform rating with a $60 target, citing strong core fundamentals despite recent challenges. The company continues to focus on menu innovation, with new offerings expected to boost sales. Despite the current economic environment, analysts remain optimistic about Chipotle’s long-term growth potential.

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