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Investing.com - KeyBanc has lowered its price target on Chipotle Mexican Grill (NYSE:CMG) to $58.00 from $60.00 while maintaining an Overweight rating on the stock. Currently trading at $45.74, the stock appears undervalued according to InvestingPro analysis, despite falling over 15% in the past week.
The adjustment follows Chipotle’s second-quarter results, which included in-line earnings per share but missed same-store sales growth expectations by approximately 110 basis points. Despite the sales shortfall, the company delivered better-than-expected store-level margins, maintaining a healthy gross profit margin of 40.16% and strong return on equity of 43%.
In response to the weaker sales performance, Chipotle has revised its full-year same-store sales growth forecast downward to approximately flat, implying about 2% growth in the second half of the year. This projection aligns with trends observed at the end of the second quarter that have continued into July.
KeyBanc noted that while this represents Chipotle’s worst quarterly same-store sales result in many years outside of the 2015/2016 food safety incidents and the COVID-19 pandemic, the firm remains confident in the company’s action plan. This plan includes enhanced marketing with greater emphasis on affordability messaging, menu innovation, and continued focus on in-store execution.
Despite the price target reduction, KeyBanc has increased its 2025 and 2026 earnings per share estimates to $1.24 and $1.46 respectively, reflecting expected productivity improvements. The firm reaffirmed its Overweight rating, citing Chipotle’s unmatched brand strength and long-term growth potential. InvestingPro data reveals 13 analysts have revised their earnings upward for the upcoming period, with the stock receiving a "Strong Buy" consensus recommendation. Get access to over 15 additional exclusive ProTips and comprehensive analysis with an InvestingPro subscription.
In other recent news, Chipotle Mexican Grill reported second-quarter results that have prompted mixed reactions from analysts. The company’s same-store sales fell by 4%, missing expectations, which has led RBC Capital to lower its price target to $58 while maintaining an Outperform rating. Similarly, TD Cowen adjusted its price target to $58, citing a challenging sales environment and a revised same-store sales growth forecast for 2025. Despite these concerns, BMO Capital reiterated its Outperform rating with a $65 price target, acknowledging the mixed results but maintaining a positive outlook.
UBS also kept its Buy rating with a $65 price target, noting sales pressures but highlighting some improvement in same-store sales and transaction growth by the end of the quarter. Piper Sandler, on the other hand, raised its price target slightly to $53, maintaining a Neutral rating, following the weaker-than-expected quarterly results. The varying analyst perspectives reflect differing views on Chipotle’s ability to navigate ongoing macroeconomic challenges. Investors are closely watching these developments as they consider the company’s future performance.
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