Market Overview

Goldman Warns Of Downside Bias In Chipotle Heading Into Q2 Earnings

Share:
Goldman Warns Of Downside Bias In Chipotle Heading Into Q2 Earnings
Related CMG
Food Safety Isn't The Only Concern For Chipotle; Goldman Sachs Cuts Target To $375
Mike Khouw Sees Unusual Options Activity In Chipotle
McDonald's Rebounds, Domino's Breaks Support After Both Serve Hot Earnings (Investor's Business Daily)

Chipotle Mexican Grill, Inc. (NYSE: CMG) is unlikely to report a meaningful improvement in its top-line in Q2, Goldman Sachs’ Karen Holthouse said in a report. She maintained a Neutral rating on the company, with a price target of $490.

Even post the food safety concerns, Chipotle’s top-line is unlikely to have improved meaningfully, and there seems to be “risk biased to the downside.” Holthouse added that the bigger focus could be on the quarter-to-date trend and the impact on the company’s performance from the launch of Chiptopia and/or the commencement of the national rollout of chorizo.

Related Link: Morgan Stanley Downgrades Chipotle, Says 13% Of Consumers Won't Go Back Anytime Soon

Impact Of Initiatives

“We are fairly cautious on Chiptopia given how narrowly it targets the most frequent users; however, we see the larger challenges as gauging the sustainability of any improvement,” Holthouse commented.

Limited data on individual customers would make it difficult to gauge whether there have been any initial benefits of Chorizo publicity versus “sustainable benefits on the back of changes in behavior, the accretion from Chiptopia changing behavior, and/or a baseline improvement as we are farther from the initial food safety incident,” the analyst stated.

Cost Outlook Not Encouraging

There is risk to the consensus expectations for 2H, due to a slower-than-expected improvement in Chipotle’s top-line as well as higher-than-anticipated marketing and promotional expenses, Holthouse noted.

Did you like this article? Could it have been improved? Please email feedback@benzinga.com with the story link to let us know!

Latest Ratings for CMG

DateFirmActionFromTo
Jul 2017ArgusDowngradesBuyHold
Jul 2017BarclaysMaintainsEqual-Weight
Jul 2017BMO CapitalDowngradesOutperformMarket Perform

View More Analyst Ratings for CMG
View the Latest Analyst Ratings

Posted-In: Goldman Sachs Karen HolthouseAnalyst Color Reiteration Restaurants Analyst Ratings General Best of Benzinga

 

Related Articles (CMG)

View Comments and Join the Discussion!