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Chipotle Mexican Grill Inc (NYSE: CMG) has inched down in recent sessions after its management warned that same-store sales were expected to see some weakness in 2025.The chain of fast-casual restaurants guided for up to 5% annualized growth in comparable sales this year, versus Street at a higher 5.4%.Still, UBS analyst Dennis Geiger recommends buying Chipotle stock on the recent weakness as she expects the sales momentum to pick up in the back half of the year.Versus its 52-week high, CMG is down nearly 20% at writing.
Chipotle stock could climb back to $70
UBS likes Chipotle Mexican Grill as its underlying traffic remained strong in the face of “one-off calendar/weather headwinds” in Q4.Dennis Geiger currently rates CMG at “buy” with an upside to $70 which indicates potential for about a 20% gain from current levels.On the earnings call, the company’s management dubbed “hot honey” a success and revealed plans to launch it systemwide by the end of March.That made Jon Tower of Citigroup maintain his positive view on Chipotle stock as well.“We see shares quickly shifting to the 2H narrative if honey chicken indeed comes in March, and, as such, see any near-term softness as an enhanced buying opportunity,” he told clients in a research note.
CMG may have been conservative with guidance
Others who remain bullish on Chipotle shares despite recent weakness include Bank of America analyst Sara Senatore.Senatore is convinced that the fast-food restaurant company opted only to be conservative with its comparable sales guidance – and menu innovation as well as its marketing and productivity initiatives will ultimately see it coming ahead of expectations in 2025.
Assuming no tariffs (60 bps across Mexico, China, Canada), y/y food margins should improve as avocado prices lap last year’s step up in 2Q, portion investments anniversary in 3Q, and supply chain savings materialise.
Chipotle stock does not, however, pay a dividend at the time of writing.
Chipotle to open hundreds of new restaurants
Chipotle Mexican Grill Inc. also stands to benefit from expected ease in wage inflation pressures in April.The New York-listed firm is investing aggressively in expansion. It opened 120 new restaurants in the fourth quarter and plans on opening another 315 to 345 new locations in 2025.More than 80% of its new restaurants will have a “Chipotlane” that reiterates CMG’s commitment to its digital strategy.Chipotle has “long-term ambitious goals of reaching 7,000 restaurants in North America, growing AUVs beyond $4 million, expanding margins and making progress towards becoming a global iconic brand,” according to its chief executive Scott Boatwright.Note that Chipotle opted for a stock split that went live on June 26th. Shares of the company are actually down about 15% at writing compared to their price immediately after the split.More By This Author:Why Peloton Stock Soared On Thursday—How High Can It Go? Snap Stock Downgraded Despite Strong Q4 Earnings Report Has Google Stock Become A Value Trap For Investors?
