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Research Firm Predicts Chipotle Will Come Up Short On Q3 Comps

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Research Firm Predicts Chipotle Will Come Up Short On Q3 Comps
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Chipotle Mexican Grill, Inc. (NYSE: CMG) shares are bouncing 2.8 percent in Wednesday’s session ahead of the company’s Q3 earnings due out on October 25. While traders may be optimistic about a recovery in the battered stock, Cleveland Research isn’t quite convinced.

Instead, the firm is looking for disappointing numbers from Chipotle this quarter. Cleveland Research predicts Chipotle’s Q3 comps will fall below consensus expectations. The firm sees continued weakness in loyalty promotions, increasing competition and lackluster demand weighing on numbers.

“Near/medium-term comp recovery outlook remains cautious given the slow progress so far this year, lack of cohesive turnaround strategy, more reliance on promotions, and continued end market pressures,” Cleveland Research explains.

Related Link: Social Media Data Suggest Chiptopia Has Failed To Reinvigorate Chipotle Customers

Despite Wednesday’s bounce, Chipotle’s stock remains down 44.1 percent since October 1 of last year. A string of health incidents, including multiple E. coli outbreaks in late 2015 and early 2016 sent Chipotle’s sales and share price tumbling.

However, with health issues seemingly now in the past, some big-name investors are now making bets on a Chipotle recovery. Bill Ackman’s Pershing Square Capital took a 9.9 percent stake in Chipotle back in September, calling the stock “undervalued” and “an attractive investment.”

If Cleveland Research’s projections are correct, Ackman and other Chipotle investors may have another tough quarter ahead while the company keeps searching for an effective turnaround strategy.

Shares traded recently at $404.96, up 2.7 percent on the day. The stock was trading under $400 this week.

Latest Ratings for CMG

DateFirmActionFromTo
Feb 2017Maxim GroupUpgradesSellHold
Jan 2017JP MorganDowngradesOverweightNeutral
Jan 2017WedbushUpgradesUnderperformNeutral

View More Analyst Ratings for CMG
View the Latest Analyst Ratings

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