UBS maintains Buy on Chipotle stock with $70 target

Wednesday, February 5, 2025 - UBS analysts have reiterated a Buy rating on Chipotle Mexican Grill (NYSE:CMG) shares, maintaining a $70.00 price target. According to InvestingPro data, CMG currently trades at a P/E ratio of 53, with analyst targets ranging from $42 to $75. The firm’s confidence in the stock persists despite mixed results in the fourth quarter and cautious guidance for 2025.

The fourth quarter showed transaction-led same-store sales (sss) gains and modest margin upside. With a perfect Piotroski Score of 9 and an "GREAT" financial health rating from InvestingPro, Chipotle demonstrates robust operational efficiency. UBS analysts noted that while early 2025 faced pressures, they anticipate momentum to improve as the year progresses. The firm recognized the impact of one-off events such as calendar and weather conditions on recent trends but remains optimistic about Chipotle’s solid underlying customer traffic.

Chipotle’s guidance for 2025 same-store sales growth of low-single to mid-single digits was seen as conservative, particularly against a consensus estimate of 5.2%. However, UBS analysts believe there are multiple factors that could drive performance toward the higher end of this range, including menu innovations that have not been factored into the guidance.

Despite expectations of margin headwinds in the first half of 2025, UBS projects strong margin expansion in the second half of the year. The analysts underscored Chipotle’s long-term growth profile, including a mid-single-digit increase in same-store sales and a 40% incremental margin flow-through, which they believe will support an over 20% growth in earnings per share in the coming years.

UBS analysts concluded their remarks by highlighting Chipotle’s status as a high-quality growth company within the sector. They pointed to the brand’s leading traffic momentum, accelerating unit growth of approximately 10%, and a path of catalysts in 2025, which includes menu innovations expected to drive sales. InvestingPro analysis reveals impressive revenue growth of 15.2% over the last twelve months, with 12 additional exclusive insights available to subscribers through the comprehensive Pro Research Report.

In other recent news, Chipotle Mexican Grill has been the subject of various analyst adjustments following its fourth-quarter earnings report. Stephens revised the company’s stock target to $60, maintaining an Equal Weight rating. The firm noted mixed results in the report, including a slight miss on same-store sales but better-than-expected outcomes in unit development, margins, and adjusted earnings per share.

Piper Sandler also adjusted its outlook, reducing the price target to $59 while keeping a Neutral rating. The firm cited a decrease in restaurant-level margins and a transaction decline in January due to weather conditions and calendar shifts.

Stifel lowered its price target for Chipotle to $68, maintaining a Buy rating. The firm noted a slightly above consensus earnings per share and a lower-than-anticipated long-term same-restaurant sales growth forecast for 2025, attributing it to a volatile January and shifts in holiday timing.

BTIG, on the other hand, maintained a Buy rating and a steadfast price target of $67. The firm anticipates mid-single-digit same-store sales growth in 2025, driven by improved service speed and successful limited-time offerings.

Lastly, Raymond (NSE:RYMD) James adjusted the price target for Chipotle shares to $66, maintaining an Outperform rating. The firm noted the need to revise the 2025 earnings per share estimates due to a more cautious outlook for first-half comparable sales and margins.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.