Morgan Stanley upgrades Chipotle, sees a stock rebound after a rough start to 2025

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Morgan Stanley upgrades Chipotle, sees a stock rebound after a rough start to 2025

The recent dip in Chipotle ******** Grill has created a buying opportunity for investors who can look past the company’s short-term difficulties, according to Morgan Stanley. Analyst Brian Harbour upgraded the fast-casual burrito chain to overweight from equal weight and increased his price target on the stock by $5 to $70, which suggests 29.7% potential upside. “A quality large cap growth compounder seeing some slowing with the stock flat to 12 months ago — what’s not to like? We’ve always appreciated CMG’s strengths and think many are set to continue,” Harbour wrote in a Monday note to clients. “An entry point has presented itself, in our view.” Chipotle has lost 10.5% this year after disappointing investors with its downbeat same-store sales forecast for 2025 and its weaker January traffic, which was impacted by volatile sales amid weather changes and the Los Angeles wildfires. Chipotle CFO Adam Rymer had said the company believes its first-quarter same-store sales will be roughly flat. “Bulls have recently argued that the company is seeing some choppy demand trends but not facing structural issues. We agree, and as the stock has continued to fade on weak sales data and growth stock pressures, an opportunity to step in has presented itself if one thinks these are short term headwinds,” Harbour said. CMG 1Y mountain Chipotle stock performance. Harbour remains bullish on the stock longer-term, however, anticipating that Chipotle’s consistent unit sales, strong balance sheet and use of automation to cut costs and drive margins could be some key growth drivers for the company. In fact, Harbour said Chipotle is an “excellent tech play” in the firm’s coverage, particularly given that the restaurant chain will likely be a leader in deploying automation at a large scale. “CMG is probably the best combination of an on-trend brand, existing scale, and incremental tech bets (both equipment and software) that in combination could be powerful, to drive margin, or offset inflation, which in turn protects the ability to underprice competitors,” the analyst said. Shares gained more than 2% in the premarket after the upgrade. Most analysts are bullish on the stock, according to LSEG. Of the 36 who cover Chipotle, 26 have a buy or strong buy rating on shares. The average price target also signals 22% upside.

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