Off the back of a rare down month for Chipotle's stock (NYSE: CMG), down 3.42% over the last 30 days, we take a look at the various goings on, with plenty to consider. The stock was temporarily halted today amid a data error indicated various companies on the NYSE had fallen by 99%. This was a temporary error, and trading was resumed as usual after a short break.
- Viral trend focussing on portion sizing
- Impending CMG stock split to ‘improve affordability'
- Analyst price target revisions
- Earnings trend
A significant development for the company's stock is the looming stock split scheduled for Wednesday, June 26th. This 50-1 stock split, announced on March 19th, indicates an adaptation to make the stock more accessible to a wider range of investors.
With the stock price trading over $3000, splitting CMG shares gives a significantly lower entry point to those that do not want to trade fractional shares. It is a psychological factor as much as anything else, but people like to get more than 0.1 of a stock in many cases when they are making an investment. A $300 investment after a 50-1 slit using a $3000 current price would give 5 shares, against that 0.1.
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Analysts Price Targets Shifting Up
Chipotle Mexican Grill has been the focus of financial analysts, with major updates to its price target. JPMorgan Chase, one of the leading analyst firms revised its price outlook for Chipotle, increasing the target from $2,750.00 to $3,000.00, maintaining a “neutral” rating on the stock today.
The decision to adjust the price objective reflects a broader sentiment among analysts, who have assigned ratings ranging from “outperform” to “buy” to “equal weight.” In the last week, Truist have upgraded their price target from $3440 to $3520, joining Oppenheimer (increased from $3300 to $3485) in setting lofty forecasts up around the $3500 mark.
On the earnings front, Chipotle has outperformed expectations in its recent quarterly report, presenting earnings per share of $13.37, on $2.7bn in revenue, both figures that delivered an upwards surprise on the consensus estimate among analysts. This type of positive performance is pivotal in solidifying investor confidence, especially during times of market volatility. This also marked a year of earnings beats, that have really raised the bar in expectations.
Off the back of such growth it is no surprise to have seen the stock outperform, as a 12 month upside of 47% can attest. With the bar well and truly raised then, Chipotle will likely have to deliver strong numbers on July 24th in order to keep momentum going.
The operational footprint of Chipotle spans the United States, Canada, France, Germany, and the United Kingdom, showcasing a diverse range of food and beverage offerings in various formats. This international presence enables Chipotle to cater to a global customer base, further cementing its brand in the fast-casual dining sector.
Chipotle looks set to march ahead with strong performances and strategic decisions, such as the announced stock split, that could potentially widen its shareholder base. With analyst elevating their price targets and an overall bullish consensus rating, Chipotle appears well-positioned to maintain its trajectory in the competitive food industry.
