Market Overview

Chipotle Concerns Mount As 2018 Estimates At Risk; BofA Downgrades

Share:
Chipotle Concerns Mount As 2018 Estimates At Risk; BofA Downgrades

Bank of America analysts lost their appetite for Chipotle Mexican Grill, Inc. (NYSE: CMG) ahead of the company's third-quarter earnings report on Oct. 24. The firm's Gregory Francfort downgraded Chipotle's stock from Neutral to Underperform with a price target slashed from $390 to $285.

Chipotle is expected to report an "OK" third-quarter print, but could be coupled with concerning guidance metrics, Francfort explained in his note. New store opening guidance could be offered in a range of 195 to 210 and anything lower would be a negative. Management could also guide its fiscal 2018 earnings per share in a range of $9 to $10, which would fall short of the consensus estimate of $10.54 per share and cause a downward revision from Wall Street analysts.

If Chipotle's management guides its 2018 EPS above $10 per share it would set up an "optimistic" scenario and the company will likely miss its target, Francfort added.

"Despite our belief that the near-term results should be fine, we remain concerned about the 2018 consensus EPS, in particular around what we believe are aggressive labor cost assumptions," the analyst said.

There are a few risks to the analyst's bearish stance, including the potential for tax reform as Chipotle would be "one of the most positively impacted" restaurant names. Investor sentiment is already low, which may limit downside moving forward.

Related Links:

Queso Fail, Other Headwinds Lead This Analyst To Remain Cautious On Chipotle

For Chipotle, Concerns That Queso Isn't Connecting With Consumers

Image credit: Chis Potter, Flickr

Latest Ratings for CMG

DateFirmActionFromTo
Oct 2019MaintainsOverweight
Oct 2019MaintainsMarket Perform
Oct 2019UpgradesUnderperformHold

View More Analyst Ratings for CMG
View the Latest Analyst Ratings

Posted-In: Bank of AmericaAnalyst Color Downgrades Price Target Restaurants Top Stories Analyst Ratings General Best of Benzinga

 

Related Articles (CMG)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
SWKSCascendReiterates100.0
IBMWells FargoMaintains140.0
PNCWells FargoMaintains147.0
TWOUDA DavidsonMaintains17.0
IDYAOppenheimerInitiates Coverage On17.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

10 Stocks Highlighted On Wednesday's PreMarket Prep

Benzinga's Top Upgrades, Downgrades For October 18, 2017