Chipotle Mexican Grill Inc. (NYSE: CMG) shares slumped early on Monday after the stock was downgraded by a key analyst.
Wedbush downgraded Chipotle to Underperform from Neutral with a $445 price target, implying downside of about 14.5% from the current price level. The firm sees increased risk to near-term same-store sales (SSS) growth and margin expectations, with continued risk to margin expectations through 2020.
Overall, the firm’s third-quarter-to-date checks suggest SSS growth trending below the 5.7% consensus. Monthly cadence in the third quarter of 2017 consisted of a tougher July (+4.5%) and September (+6.0%), which laps the launch of Queso. As a result, considering an easier August comparison and a July comp roughly in-line with the second quarter’s 3.3%, there should be a higher SSS growth rate in August than its checks imply. Wedbush attributes a slowdown to the Ohio outbreak. The firm believes a higher year-over-year promotional cadence through the end of the third quarter is likely. However, Wedbush is lowering its third-quarter SSS growth estimate to 4.5% from 5.5%.
As a result, Wedbush lowered its earnings estimates for the next few years. The firm lowered its 2018 EPS estimate to $8.64 from $8.85, 2019 estimate to $11.43 from $11.47 and 2020 EPS to $14.00 to $14.19.
Shares of Chipotle closed Friday at $520.71, with a consensus analyst price target of $462.43 and a 52-week range of $247.52 to $530.68. Following the announcement, the stock was down about 1.5% at $513.00 in early trading indications Monday.
Essential Tips for Investing: Sponsored
A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Editors' Picks
