TD Cowen downgrades Chipotle, cuts target on soft October sales

Investing.com -- TD Cowen downgraded Chipotle Mexican Grill to Hold from Buy and cut its price target to $32 from $44 in a note on Wednesday.

Analyst Andrew Charles warned that alternative data points to a lackluster start to the fourth quarter.

“We worry Oct. sales are shaping up to miss the 4Q inflection point that we had previously expected over an easy monthly compare,” he wrote.

The firm forecasts slightly better-than-consensus third-quarter results. However, it said the weak start to the fourth quarter, when the business was widely expected to accelerate, sets the stage for a challenging 2027.

Charles noted that the fourth quarter reflects 2026’s most tangible sales efforts, including menu innovation, new marketing campaigns and value pushes through the Chipotle Rewards loyalty program.

He believes meeting consensus same-store sales growth of 3% or more in 2027 would require less proven drivers, such as the high-efficiency equipment package and catering.

TD Cowen now models fourth-quarter 2026 same-store sales growth of 1%, the lowest on the Street. It forecasts 2.1% for 2027 and 2.5% for 2028, compared with consensus of 3.2%, 3.2% and 3.4%, respectively.

“We see a realistic bear case that medium term 3%-3.5% consensus same store sales forecasts are too high as the brand relies less on pricing to prioritize growing traffic,” Charles said.

The firm expects long-term same-store sales growth of about 2.5% and low double-digit EPS growth. Its $32 target is based on about 24 times rolling two-year forward EPS of $1.34.

TD Cowen added that its $25 bear case is more likely to play out than its $40 bull case.

Original Article

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