Analysts Lowered Their Price Target for Chipotle
E. Coli Aftermath: Chipotle’s 2016 Outlook Looks Bleak
Price target
As of April 27, 2016, Chipotle Mexican Grill (CMG) was trading at $417.1. The price might have already factored in the estimates that we discussed previously in this series. In this part, we’ll look at analysts’ recommendations and estimated target prices for the stock over the next 12 months. Chipotle forms 0.08% of the holdings of the iShares Core S&P 500 ETF (IVV).
Despite implementing food safety measures, Chipotle posted lower-than-expected same-store sales growth in 1Q16. The same-store sales growth was -26 in the first three weeks of April. As a result, analysts revised their earnings estimate for the next four quarters. This compelled analysts to lower their price target for the next 12 months to $455.9. Earlier, analysts’ estimate was $478.2. The new price target represents a return potential of 9.3%. On the higher side, Nicole Miller Regan of Piper Jaffray estimated the share price to reach $590. On the lower side, Stephen Anderson of Maxim Group forecast it to reach $300.
Over the next 12 months, analysts expect the share price of Chipotle’s peers Panera Bread (PNRA), Shake Shack (SHAK), and Brinker International (EAT) to rise 7.8%, 7.8%, and 7.5%, respectively.
Analysts’ recommendations
According to a Bloomberg consensus in a survey of 34 analysts, 32.4% gave Chipotle a “buy” recommendation, 50% gave it a “hold” recommendation, and 17.6% gave a “sell” recommendation. Chipotle’s share price moves in tandem with analysts’ recommendations. As analysts raise their next 12-month target price, the share prices will also increase and vice versa.
Chipotle’s share price is being traded at a lower price than its target price. This doesn’t mean an automatic buy. Before investing, investors should carefully analyze all of the various matrixes we covered in this series.
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