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Investing.com - Piper Sandler upgraded Chipotle Mexican Grill (NYSE:CMG) from Neutral to Overweight on Tuesday, while adjusting its price target to $50.00 from $53.00. According to InvestingPro data, the stock is currently trading near its 52-week low, with an RSI indicating oversold conditions.
The upgrade comes despite the stock’s challenging performance, with shares down approximately 31% year-to-date, suggesting much of the negative outlook may already be priced in. The company maintains strong fundamentals, with InvestingPro analysis showing sufficient cash flows to cover interest payments and liquid assets exceeding short-term obligations.
Piper Sandler sees potential for about 20% upside in its base case scenario, which assumes Chipotle will achieve comparable sales growth of 3.0% over the next two years.
The firm acknowledges investor debate around whether Chipotle can maintain mid-single-digit same-store sales growth, but believes the market has already priced in a scenario where the company falls short of that target next year.
While recognizing potential risks to Chipotle’s top-line performance in the second half of this year, with its estimates falling below consensus, Piper Sandler maintains that "a lot of the bad has already been priced in" for the restaurant chain.
In other recent news, Chipotle Mexican Grill reported its second-quarter results, revealing a 4% decline in comparable sales and a nearly 5% drop in transactions. Despite these challenges, the company managed to deliver earnings per share of $0.33, aligning with consensus estimates. However, the company has lowered its guidance for same-store sales (SSS) in future periods. Analyst firms have responded to these developments with various ratings and price target adjustments. Truist Securities lowered its price target for Chipotle to $60 while maintaining a Buy rating, citing the SSS miss as a factor. Similarly, KeyBanc adjusted its price target to $58 due to concerns over sales growth, yet kept an Overweight rating. Meanwhile, BMO Capital reiterated an Outperform rating with a $65 price target, acknowledging the mixed results but maintaining a positive outlook. In other company news, Computer Modelling Group announced the appointment of Vipin Khullar as its new Chief Financial Officer.
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