Chipotle's Q3 Results Should Show If Promotions Helped Customers Forgive And Forget

Is it possible to forgive and forget when it comes to a tarnished restaurant's reputation? Buckingham research analysts believe that investors will do both when it comes to Chipotle Mexican Grill, Inc. CMG's recent food safety issues that heavily weighed on its stock for months.

"This recovery, against easy comparisons, should lead to a positive inflection in comps conjoined with margin recovery and generating a positive catalyst for shares," said Buckingham Research.

Chiptopia Driving The Comeback

Analysts believe that Chipotle remains a very attractive growth opportunity at its current depressed levels. Buckingham Research has lowered estimates, however, ahead of the results, expecting Chipotle's same restaurant sales estimates to decline 20 percent from previous expectation of a 17 percent drop in 3Q16.

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Chipotle's customer loyalty program, Chiptopia, has been receiving some positive consumer reaction. Analysts feel the program has been successful in driving increased traffic and transactions. With expectations very low, any good news in this quarter could shape up to be a very positive catalyst for Chipotle moving forward.

Buckingham Research maintains a Buy rating with a $547 price target on Chipotle.

At last check, Chipotle was flat on the day, trading at $405.49.

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