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OTR Global Downgrades Chipotle, Says Trends 'Soft'

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October 14, 2015 2:20 pm
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Correction: A previous version of this article incorrectly referred to the firm as “OTR Research.” The firm’s name is “OTR Global.”

  • OTR Global downgraded its rating on shares of Chipotle Mexican Grill, Inc. (NYSE: CMG) to Mixed ahead of the announcement of the company’s third quarter financial results, scheduled for next Tuesday.
  • Consensus earnings and revenue expectations are, however, quite high at the time.
  • Nonetheless, shares of Chipotle Mexican Grill are down more than 4 percent on Wednesday trading.

On Wednesday, analysts at OTR Global downgraded their rating on shares of Chipotle Mexican Grill to Mixed on the back of what they call “plan attainment weakens.” According to the firm, third quarter sales will come in below the planned levels for 7 of 40 managers. In fact, only 5 managers expect to see above-planned sales figures (versus 13 out of 38 that exceeded the plan in the second quarter, with none below).

Related Link: How Chipotle Can Hit $825 On Carnitas Return, Coupons And BOGO

Third quarter year-over-year transactions are, also, slightly weaker than they were in the second quarter, year-over-year, even in spite of the surge seen around mid-quarter, driven by Friend or Faux BOGO.

Third quarter tickets, on the other hand, were up for 28 of 40 managers (versus 34 out of 37 in the second quarter). Moreover, “heavy coupon redemption undercut slight price hikes on beef, barbacoa,” the analysts add.

Overall, trends are “still soft in October.” However, the firm expects trends to improve in the fourth quarter of the year.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.

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