Chipotle Mexican Grill, Inc. (NYSE: CMG) has a history as a growth stock that could do no wrong for its investors. It now faces the same fate as so many growth stocks that have be reclassified as cyclical or even value stocks — that massive growth phase is history. The public complaints about the size of its burritos may still be opinion, but strategic investors now have more concerns to consider. It’s not that Chipotle cannot keep growing. It will keep growing, but a lack of strong earnings reports and other metrics are putting Chipotle’s stock classification in limbo.
While Chipotle has been facing ongoing complaints about the shrinking size of its Burritos, cash-strapped consumers may just have a problem paying a premium price when prices are already so high. And Chipotle’s woes are not really all that burdened by would-be tariff concerns. Is this maturing story one of growth, value, cyclical or GARP (growth at a reasonable price)?
Chipotle’s latest quarterly results are a sign of a growth company facing continued growing pains. Some of its metrics can return and continue to improve, but this is no longer the must-own stock that it was from 2018 to 2024. And now it’s time for shareholders to decide whether they want to stick around or go chase other promising growth stories that have far less market penetration and geographic expansion opportunities.
Chipotle’s post-earnings reaction sent shares down 9% to 10% in the after-hours trading session on Wednesday. Things were even worse on Thursday, closing down a final 13.3% at $45.74. Its total trading volume of more than 75 million shares was a 600% volume spike as well. Its traditional growth investors seem to be running for the exit.
While Oggonomics doesn’t do full earnings recaps, the reality is that its disappointment cannot be ignored. The company blamed concerned consumers for lower ticket sales and same-store sales were down 4% even if t managed to grow revenues by 3% due to continued store openings (3,839 stores now versus 3,530 a year ago, with 61 openings last quarter). Chipotle did say that the comparable sales were turning positive again by June into July, but its long plan of growing into and reaching 7,000 stores is just going to take some time.
There are some concerning technical metrics on the stock chart as well. When Chipotle finally got around to its historic 50-for-1 split in mid-2024 when shares were $65 on a split-adjusted basis, Wall Street analysts were just stepping all over each other’s feet to raise price targets and estimates. Then came the news that star CEO Brian Niccol was leaving Chipotle to run Starbucks Corporation (NASDAQ: SBUX) and the stock fell from to $52 — and the stock has been flip-flopping between $50 and $60 for the last 11 months. But now the stock broke through prior support under the key $50 threshold.
Piper Sandler actually raised its target to $53 from $52 in its muted call, but Wall Street analysts are chopping down any remnants of aggressive price targets they had before the report. These are some of those calls:
- Baird maintained its Outperform rating but cut its target to $59 from $62.
- Barclays maintained its Equal Weight rating but lowered its price target to $53 from $55.
- BofA maintained its Buy rating and kept its $64 price objective, noting superior long-term growth metrics driving earnings.
- Citigroup maintained a Buy rating based on valuations keeping some investors interested, but it trimmed its target to $62 from $68.
- CFRA (S&P) maintained its Strong Buy because of long-term growth and margin potential but cut its price target to $56 from $66.
- KeyBanc Capital Markets maintained its Overweight rating but trimmed its target to $58 from $60.
- Raymond James maintained its Buy rating but trimmed its price target to $60 from $62.
- TD Cowen maintained its Buy rating but cut its target to $58 from $61.
- Wells Fargo maintained its Overweight rating but cut its target to $60 from $65.
Even rounding the stock to $46 comes with a premium against the market. Consensus earnings (per share) estimates of $1.21 for 2025 and $1.42 for 2026 give it implied earnings multiples of 38-times for 2025 and 32-times for 2026. Those multiples may be cheaper than what Chipotle shareholders were used to paying before 2024. That just doesn’t mean its a cheap stock, nor is it a value stock. As for GARP — that’s up to each investor to decide if the “reasonable price” is reasonable enough.
Again, Chipotle’s growth is not dead. What looks dead at this point is that Chipotle’s track to reaching 7,000 domestic stores and growing its average sales volume to $4 million per year is something that will require patience. And Chipotle has to be able to grow into that larger footprint as well.
