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On Thursday, UBS analyst Dennis Geiger revised the price target for Chipotle Mexican Grill (NYSE:CMG) stock to $60.00, down from $65.00, while retaining a Buy rating on the shares. The adjustment follows the company’s first-quarter results, which showed sluggish same-store sales (sss) and continued pressures into the second quarter to date (2QTD). Despite the price target reduction, the company maintains strong fundamentals with a gross profit margin of 40.5% and a healthy current ratio of 1.52. According to InvestingPro data, 18 analysts have recently revised their earnings expectations downward for the upcoming period, though Geiger noted that margins were slightly better than expected and restaurant development remained robust.
Chipotle’s focus is on expectations for a return to positive transaction growth in the second half of the year, supported by multiple initiatives. This outlook persists despite year-to-date pressures and a challenging macroeconomic environment that has dampened demand. The company’s revenue growth remains solid at 14.6% over the last twelve months, according to InvestingPro analysis, which shows the company maintains strong financial health metrics despite current headwinds. Chipotle’s sales have been further challenged into April due to broader industry headwinds such as weaker consumer spending, effects from pricing roll-off, a shift in the Easter holiday, and tough year-over-year comparisons, which saw a 11.1% increase in the second quarter of 2024.
The company’s full-year 2025 same-store sales guidance has been adjusted to a low single-digit increase from a previous range of low to mid-single-digit growth. This revision was anticipated given the softness observed year-to-date. The debate continues as to whether the guidance has been sufficiently de-risked. With a strong return on equity of 46% and robust cash flows that easily cover interest payments, InvestingPro analysis suggests the company maintains solid fundamentals despite near-term challenges. Geiger suggests that while the burden is on Chipotle to drive sales trends back towards mid-single-digit growth, it is premature to discount the possibility of a rebound to these levels over time. He refers to Chipotle’s long-standing record of consistent and robust same-store sales strength, despite the current challenges faced in 2025.
In other recent news, Chipotle Mexican Grill has reported a decrease in same-restaurant sales by 0.4%, marking its first negative quarterly result since late 2016, excluding the pandemic-affected period. The company has adjusted its full-year guidance to low single digits, responding to a challenging economic climate where consumers are spending less. In response, Chipotle plans to enhance its marketing efforts and introduce a new menu item to boost sales. Analysts from Stifel, Bernstein, TD Cowen, and RBC Capital have maintained positive ratings on Chipotle’s stock, with price targets ranging from $56 to $65, despite the recent sales dip.
Bernstein analysts remain optimistic about Chipotle’s long-term prospects, citing strong fundamentals and a slight increase in margins. Meanwhile, RBC Capital has adjusted its price target to $60, acknowledging the impact of macroeconomic factors on store growth. TD Cowen reduced its target to $57, noting the company’s proactive strategies to drive customer traffic. BMO Capital maintained a Market Perform rating with a $56 target, highlighting Chipotle’s ability to exceed earnings expectations despite broader consumer pressures. These developments reflect Chipotle’s strategic adjustments to navigate the current market challenges.
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