KeyBanc has revised its price target for Chipotle Mexican Grill (CMG, Financial), lowering it from $60 to $58 while maintaining an Overweight rating on the stock. Despite a better-than-expected earnings per share result in Chipotle's first quarter, driven largely by strong margins, the company's same-store sales growth did not meet expectations set by analysts.
The adjustment reflects a tempered outlook for Chipotle, although KeyBanc remains optimistic about the company's future prospects. The firm highlights Chipotle's strategic initiatives, including enhanced marketing efforts, menu innovations, and a dedicated focus on improving in-store operations, as key components that could drive future growth.
The firm suggests that the restaurant industry is starting to recover from earlier challenges, such as weather disruptions, and believes Chipotle is well-positioned to capitalize on this momentum. Despite the lowered price target, KeyBanc's confidence in Chipotle's long-term strategy remains strong.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 31 analysts, the average target price for Chipotle Mexican Grill Inc (CMG, Financial) is $60.94 with a high estimate of $73.00 and a low estimate of $46.12. The average target implies an upside of 24.98% from the current price of $48.76. More detailed estimate data can be found on the Chipotle Mexican Grill Inc (CMG) Forecast page.
Based on the consensus recommendation from 36 brokerage firms, Chipotle Mexican Grill Inc's (CMG, Financial) average brokerage recommendation is currently 1.8, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Chipotle Mexican Grill Inc (CMG, Financial) in one year is $60.64, suggesting a upside of 24.36% from the current price of $48.76. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Chipotle Mexican Grill Inc (CMG) Summary page.
CMG Key Business Developments
Release Date: April 23, 2025
- Revenue: $2.9 billion, a growth of over 6% year over year.
- Comparable Sales: Decline of 0.4%.
- Digital Sales: Represented 35.4% of total sales.
- Restaurant Level Margin: 26.2%, a decrease of 130 basis points year over year.
- Adjusted Diluted Earnings Per Share: $0.29, representing 7% growth over last year.
- New Restaurant Openings: 57 new restaurants, including 48 Chipotles.
- Cost of Sales: 29.2%, an increase of about 40 basis points from last year.
- Labor Costs: 25%, an increase of about 60 basis points from last year.
- Marketing and Promo Costs: 3% of sales in Q1, an increase of about 10 basis points from last year.
- Cash and Investments: $2.1 billion with no debt.
- Share Repurchase: $554 million of stock purchased at an average price of $54.15.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Chipotle Mexican Grill Inc (CMG, Financial) reported a sales growth of over 6% to reach $2.9 billion in the first quarter.
- The launch of Chipotle Honey Chicken has been successful, driving incremental transactions and receiving positive guest feedback.
- The company opened 57 new restaurants in the quarter, with plans to open between 315 and 345 new restaurants this year.
- Chipotle Mexican Grill Inc (CMG) is investing in technology and innovation, including the rollout of produce slicers and a new equipment package to improve efficiency.
- The company maintains a strong balance sheet with $2.1 billion in cash and no debt, allowing for continued investment in growth and innovation.
Negative Points
- Comparable sales declined by 0.4% in the first quarter, indicating a slowdown in consumer spending.
- Restaurant level margin decreased by 130 basis points year over year to 26.2%.
- The company faces headwinds from inflation and higher usage costs, particularly in avocados, dairy, and chicken.
- Chipotle Mexican Grill Inc (CMG) is experiencing a slowdown in underlying transaction trends due to consumer uncertainty and economic concerns.
- The impact of tariffs on cost of sales and new store builds remains uncertain, potentially affecting margins and capital expenditures.
