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Investing.com - Raymond James lowered its price target on Chipotle Mexican Grill (NYSE:CMG) to $40.00 from $52.00 on Thursday, while maintaining an Outperform rating on the stock. The new target still suggests potential upside from the current price of $39.76, with CMG shares trading near their 52-week low of $38.30 after declining 34% year-to-date. According to InvestingPro data, the stock appears slightly undervalued based on Fair Value estimates.
The firm cited weaker sales trends entering the fourth quarter and rising commodity inflation pressures extending into 2026 as key factors behind the adjustment. Chipotle’s comparable sales increased just 0.3% in the third quarter, meeting reduced expectations, but recent trends have weakened further. This slowdown comes despite Chipotle maintaining 8.57% revenue growth over the last twelve months, reaching $11.58 billion.
Raymond James noted that Chipotle is experiencing reduced spending and frequency among customers with incomes below $100,000 and in the 25-35 age group, attributing this to higher unemployment and student loan repayment pressures. The intense value-focused competitive environment in the restaurant industry was also identified as a challenge.
Despite these headwinds, Raymond James believes Chipotle maintains a strong value proposition with entry-level chicken bowls priced under $10 in most markets. The firm expressed confidence that initiatives to improve operations and accelerate innovation will eventually gain traction, though it suggested the company’s reluctance to directly message value could prolong recovery. InvestingPro data shows Chipotle maintains solid financial health with a "GOOD" overall score and strong liquidity, as its current ratio of 1.65 indicates liquid assets exceed short-term obligations.
Raymond James lowered its 2026 adjusted earnings per share estimate by 14% to $1.13, representing minimal earnings growth for the second consecutive year, but maintained that patient investors "will be rewarded" despite potential near-term stock price constraints. This cautious outlook aligns with InvestingPro data showing 15 analysts have revised earnings downward and the stock trades at a high P/E ratio of 35.5 relative to growth (PEG ratio: 3.38). For comprehensive analysis of Chipotle and 1,400+ other stocks, explore InvestingPro’s detailed Research Reports that transform complex data into actionable investment intelligence.
In other recent news, Chipotle Mexican Grill reported its third-quarter earnings for 2025, revealing a mixed performance. The company met earnings per share expectations at $0.29, but its revenue fell short of forecasts, coming in at $3 billion. Analysts have responded to these results with adjustments to their price targets for the company. Stifel has lowered its price target for Chipotle to $50 from $60, maintaining a Buy rating, citing weaker-than-expected comparable sales due to macroeconomic pressures. Similarly, Mizuho reduced its price target to $34 from $40, maintaining a Neutral rating, after describing Chipotle’s Q3 performance as underwhelming and noting a lower-than-expected sales growth outlook for the fourth quarter. Goldman Sachs also adjusted its price target to $45 from $52, maintaining a Buy rating, due to concerns about inflationary pressures and their impact on Chipotle’s core consumer segments. These recent developments highlight the challenges Chipotle faces in navigating current economic conditions.
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