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On Thursday, Raymond (NSE:RYMD) James analyst Brian Vaccaro adjusted the price target for Chipotle Mexican Grill (NYSE:CMG) stock, bringing it down to $58.00 from the previous $60.00. Despite this change, the firm maintains an Outperform rating on the restaurant chain’s shares. According to InvestingPro data, analyst targets for CMG range from $46.00 to $72.00, with 18 analysts recently revising their earnings expectations downward. The stock currently appears fairly valued based on InvestingPro’s Fair Value analysis.
Vaccaro’s commentary followed Chipotle’s first-quarter results, which he described as mixed. While the company’s earnings per share met expectations, comparable store sales, also known as comps, slightly declined by 0.4%, which was under Raymond James’s estimate of a 0.5% increase. This downturn in sales was somewhat mitigated by improved store margins and reduced general and administrative expenses. InvestingPro data shows the company maintains a healthy gross profit margin of 40.5% and achieved revenue growth of 14.6% over the last twelve months.
The analyst observed that customer traffic for Chipotle had turned negative year-over-year in the first half of 2025. He noted the challenges in distinguishing the effects of a softer consumer spending environment and macroeconomic uncertainties from the impact of more strenuous comparisons to previous performance metrics.
Nevertheless, Vaccaro expressed confidence in Chipotle’s strong brand presence and value proposition, citing that a chicken burrito or bowl is still priced under $10 in most markets. He anticipates a potential rebound in traffic in the second half of the year, supported by a greater than 20% increase in advertising spending in the second quarter, new menu items such as sides or dips, and more favorable year-over-year comparisons.
Looking ahead, Vaccaro believes that Chipotle is on track to resume margin expansion in the latter half of 2025. He predicts that the impacts of tariffs will be manageable, estimating a 50 basis point effect before any pricing decisions are made. Additionally, the company is expected to benefit from the annualization of portion size adjustments and savings from slicers and supply chain improvements, with about half of Chipotle’s units currently equipped with slicers. InvestingPro analysis reveals strong financial health metrics, with liquid assets exceeding short-term obligations and a moderate debt level. For deeper insights into CMG’s financial health and growth potential, including access to comprehensive Pro Research Reports covering 1,400+ top stocks, consider an InvestingPro subscription.
The analyst is also optimistic about Chipotle’s long-term prospects, highlighting the potential for new kitchen equipment to enhance productivity and margins. Furthermore, he sees significant growth opportunities in the company’s catering services, which currently account for only 1.5% of sales but have the potential to reach mid-single-digit percentages over time.
In other recent news, Chipotle Mexican Grill reported its first-quarter earnings for 2025, revealing an adjusted earnings per share (EPS) of $0.29, which matched analyst expectations. However, the company faced a revenue shortfall, posting $2.88 billion against a forecasted $2.98 billion. This revenue miss was attributed to weaker-than-expected customer traffic, which declined by 2.3%, and a slowdown in same-store sales growth. Despite these challenges, Chipotle maintained strong restaurant-level margins at 26.2%, slightly outperforming expectations from Goldman Sachs and consensus estimates.
Analysts have responded to these developments with mixed adjustments to Chipotle’s stock price targets. Evercore ISI and Goldman Sachs both reduced their price targets to $57, while KeyBanc Capital Markets set theirs at $58, each maintaining positive ratings on the stock. The analysts’ outlooks suggest cautious optimism, with strategic initiatives expected to support performance improvements. These initiatives include increased marketing efforts, menu innovations, and operational enhancements.
Looking forward, Chipotle’s management remains cautious, anticipating continued challenges in customer traffic due to economic uncertainties. However, they are optimistic about the potential positive impact of new limited-time offers and expanded marketing strategies. Additionally, the company is exploring growth opportunities, such as expanding its catering service, which could contribute to long-term growth. Despite the immediate hurdles, Chipotle’s long-term growth prospects, including plans for international expansion, remain a focus for the company.
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