Earlier today, Loop Capital upgraded Chipotle Mexican Grill (CMG) to a Buy rating due to the restaurant chain’s manageable tariff risk and strong comparable sales growth. The firm set a $65 per share price target, which is up from the previous target of $58 and equates to a 30% upside from today’s closing price. This upgrade comes after a 17% decline in CMG’s stock price since the beginning of the year.
It is worth noting that Chipotle’s comparable traffic growth has been quite impressive. Indeed, it accelerated from 5% in 2023 to 5.3% last year. This growth is notable, especially since there is an industry-wide promotional environment that is causing challenges for most competitors. Interestingly, Loop Capital analyst Alton Stump believes that if comparable sales continue to beat expectations, then there is the potential for at least 7-8% upside to the current 2025 EPS estimate of $1.30.
Furthermore, when it comes to tariffs, Stump views Chipotle’s risk as manageable, as the company sources only about 2% of its inputs from Mexico, which primarily consists of avocados. While management has indicated that tariffs could lead to headwinds of about 60 basis points on the total cost of sales, Stump believes Chipotle could implement additional price increases to offset these costs. Indeed, the company has already increased menu prices by about 2% this year.
Is CMG Stock a Good Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on CMG stock based on 19 Buys, five Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average CMG price target of $67.35 per share implies 34.6% upside potential.
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