Bullish indicating open at $55-$60, IPO prices at $37
Investing.com -- Loop Capital lifted its rating for Chipotle Mexican Grill (NYSE:CMG) to Buy from Hold on Friday, citing a recent pullback in its share price as creating an "attractive buying opportunity".
The stock has declined nearly 10% since the firm’s previous report in February, and analysts believe this offers investors an opportunity to buy into the stock at a favorable price.
The firm has set a price target of $65, based on a ~35x EV/EBITDA estimate for 2025.
Loop Capital’s confidence stems from Chipotle’s strong performance in comparable sales growth, having reported “in-line or better-than-expected” results for the past eight quarters.
Analysts point to several factors contributing to this success, including the shift toward higher volume Chipotlanes, improvements in throughput during peak hours, and a steady LTO (Limited Time Offer) platform.
In particular, they point to the fact that the company’s 2-year stack has held steady, showing a 15.3% growth in 2024 compared to 15.9% in 2023.
Despite some early-year challenges, including unfavorable weather conditions, Loop Capital is optimistic about the company’s ability to recover, especially with the expected launch of honey chicken as a new LTO in March.
They also note that if Chipotle maintains its 15.0% 2-year stack in 2025, there could be upside of $0.10 to the current EPS estimate of $1.30.
Additionally, the company has “manageable tariff risks,” as only about 2% of its total inputs come from Mexico, mainly avocados.
Despite potential tariff headwinds, Chipotle could implement price increases to offset the impact, with the firm projecting 2.0% higher menu prices for the year.
Loop Capital is maintaining its comparable sales and EPS estimates for 1Q25, 2025, and 2026, while remaining confident in the company’s future growth potential.