JPMorgan Cuts Target On Chipotle To $485, Maintains Overweight

Chipotle Mexican Grill, Inc. (NYSE: CMG) reported 1Q16 loss per share of $0.88 and store margins of 6.8 percent. JPMorgan’s John Ivankoe maintained an Overweight rating for the company, while reducing the price target from $510 to $485.

Chipotle Recovery Taking Longer, More Expensive

Chipotle’s 1Q comps declined 29.7 percent. New unit volumes were at $1.2 million, representing 70.3 percent y/y growth, but down from the 4Q15 levels of $1.6 million and 75.1 percent growth. The company’s 2Q16 comp are trending lower than expected, analyst John Ivankoe said.

The 2Q16 comp estimate has been reduced from a decline of 15 percent to a 20 percent decline. Ivanhoe expects Chipotle’s 3Q16 comps to decline 15 percent.

Management indicated plans to continue to balance the opportunity for further growth with a “disciplined approach to development," while trying to ensure that new unit openings have strong economics and are staffed appropriately.

Ivanhoe pointed out that the recovery in Chipotle’s performance has taken longer and been more expensive than expectations. He recommended investment in shares on likely weakness.