Chipotle Mexican Grill stock continued its strong downward trend as analysts remained concerned about its slowing growth. CMG dropped to $28.15, its lowest level since June 4, and 32% below the year-to-date high. Focus now shifts to the upcoming earnings report, which may shed insights on its business.
A top Chipotle Mexican Grill bull has given up
Top analysts have lowered their estimates of Chipotle Mexican Grill, citing its slow revenue and profitability growth. Andrew Charles, a TD Cowen analyst who has long maintained a bullish outlook for the stock, has downgraded his recommendation and target.
He lowered his target from $44 to $32, the lowest target among analysts. He also noted that the stock may drop to as low as $25 a share in the next 12 months. He said:
“The start of the quarter is showing underlying softness at a time when the business ought to be clicking. Now that we believe that it’s more likely Chipotle is going to miss 2027 estimates more materially, we thought now is a good time to move to the sidelines.”
Other top analysts have lowered their targets on Chipotle stock. Deutsche Bank lowered its target from $51 to $45, while Wells Fargo’s Zachary Fadem slashed from $45 to $40. Citigroup’s John Tower cut the target from $45 to $43.
As a result, the consensus target among analysts is $43.74, much lower than where it was 12 months ago, when analysts were expecting it to rise to $56.4.
Chipotle earnings will need to reassure investors
The ongoing CMG stock retreat has coincided with the weakness in its business as many consumers complain about the elevated inflation. US consumer confidence has also been in a downward trend in the past few months.
The most recent results showed that Chipotle’s revenue rose 9.3% in the second quarter to $3.3 billion. Its comparable restaurant sales rose by 2.2%, while its operating profit margin fell to 15.7% from the previous 18.2%.
Yahoo Finance data shows that analysts expect the upcoming earnings to show that its revenue rose by 9.35% in the third quarter to $3.28 billion. Its full-year guidance is expected to come in at $13.02 billion, up by 9.2% from last year.
Chipotle will need to reassure investors that the “Recipe for Growth” strategy was working. This approach has five pillars, including operational excellence, digital innovation, menu development, talent cultivation, and global expansion. It plans to open 350 to 370 new restaurants this year, with some of them being international ones. It has already opened new stores in Mexico.
Chipotle is also working on increasing the number of stores with Chipotlanes, improving its menu, and ways to increase traffic flow. Signs that these strategies are working will boost its stock price.
CMG stock price technical analysis
The daily chart shows that Chipotle stock has been in a strong sell-off this year. This sell-off started in 2024 when it peaked at $69.28. It has formed a series of lower lows and lower highs.
The stock has dropped below all moving averages. It is also stuck at a crucial support level, which coincides with the lowest level in June.
Moving below that level will point to more downside, potentially to the psychological level of $25, which is about 10% below the current level.