Baird ‘not concerned’ about Mexico avocado shipment news hurting Chipotle

Baird analyst David Tarantino notes Chipotle shares declined about 6% today, stating that the firm was hearing that part of the weakness may be related to investor concerns about media reports about the suspension of certain Mexico avocado shipments due to security concerns in the Michoacan region. However, after touching base with management, the firm is “not concerned about this issue” given Chipotle remains on track to shift the majority of its avocado purchases toward contracted pricing with supply from Peru and to a lesser extent Colombia in calendar Q3, consistent with plans shared at the firm’s conference in early June. The firm, which said it remains comfortable with its near-term margin assumptions, has an Outperform rating and $3,500 price target on Chipotle shares, which closed down 6% at $3,214.01 on Thursday.