Have Investors Lost Their Appetite for Chipotle Stock?

Chipotle Mexican Grill (CMG) has long been a darling of growth investors, but its stock has faced turbulence since early 2024. With volatile price swings, analyst downgrades, and mixed quarterly results, the question looms: Has the market’s enthusiasm for this burrito behemoth cooled? Let’s dissect the data to find out.

The Volatile Price Journey

Chipotle’s stock price has been a rollercoaster since its 50:1 stock split in June 2024, which reset its share price from over $65 to around $1.30. Post-split, the stock climbed to a high of $62.24 (pre-split equivalent) by December 2024 but retreated to $50.90 by March 2025, reflecting near-term uncertainty. In April 2025, shares swung between $47.10 and $53.97, including a sharp rebound from $45.90 to $50.93 in two days—a sign of lingering volatility.

Analysts: Cautious but Still Bullish

Despite recent headwinds, 29 analysts maintain a "Strong Buy" consensus on CMG. The average 12-month price target of $59.18 implies a 14.29% upside from April 2025’s $51.78 close. However, not all are bullish:

• Goldman Sachs cut its target to $57.00 from $69.00, citing cautious growth outlooks.
• Stephens downgraded to "Sell," citing Q1 2025 sales disappointments.
• Bernstein, though noting Q1 underperformance, reaffirmed an "Outperform" rating.

While some analysts are tempering expectations, the overall sentiment remains tilted toward growth.

Earnings: A Mixed Plate

Chipotle’s earnings per share (EPS) continue to shine. The company has 100% beaten EPS estimates over the past 12 months—far outpacing the restaurant industry’s 40.63% average. The next quarter’s EPS estimate is $0.33, with a wide range of $0.31–$0.39.

Sales, however, are less rosy. The next-quarter sales estimate is $3.12 billion, but the company has only 25% outperformed sales expectations in the past year, lagging the industry’s 48.72%. This discrepancy suggests execution challenges in scaling revenue growth.

Key Catalysts: Q1 2025 and the Split’s Impact

• Q1 2025 Disappointments: Bernstein called out weak sales and slower traffic growth, spurring some analyst downgrades. The split itself, while neutral in equity value, may have skewed short-term sentiment by making the stock more accessible to retail investors—potentially amplifying volatility.
• Analyst Success Rates: Top analysts like KeyBanc boast a 74% success rate over one year, with average returns of +30.36%, underscoring CMG’s allure to seasoned stockpickers.

Conclusion: Appetite Intact, but Digestion Required

Investors haven’t abandoned Chipotle—they’ve simply become pickier. The "Strong Buy" consensus, $59.18 average target, and consistent EPS outperformance suggest long-term faith in CMG’s brand strength and operational resilience. Yet, the dip below $52 in April 2025 and analyst downgrades highlight near-term risks tied to sales execution and competitive pressures.

The verdict: While appetite for Chipotle remains robust, investors are demanding clearer proof of sales momentum to sustain the stock’s premium valuation. For now, the $59.18 price target—driven by 100% EPS reliability and a 14% upside—supports a "Hold" to "Buy" stance. But until sales growth aligns with earnings optimism, volatility will linger.

Chipotle’s recipe for success hasn’t changed—just the serving size. Investors will keep coming back for seconds, but they’re watching the calorie count (i.e., valuation) closely.