On Monday, Raymond (NS:RYMD) James set a new price target for Chipotle Mexican Grill (NYSE:NYSE:CMG) shares at $72.00, an increase from the previous target of $66.00. The firm continues to endorse an Outperform rating for the fast-casual restaurant chain.
The adjustment in the price target comes after an evaluation of the company's recent pricing strategy, which included an approximately 2% price increase. This change has led to an updated fourth-quarter comparable sales (comp) estimate, which is now anticipated to be up by 6%, a slight increase from the previously projected 5.5%.
Raymond James' analysis anticipates that Chipotle's earnings per share (EPS) for 2025 will remain largely consistent at $1.28. This forecast is based on a 5.3% rise in comps, a slight decrease in store margins to 26.5%, and an expected EBITDA of $2.65 billion, marking a 16% year-over-year growth. The firm also projects general and administrative expenses to be around $695 million, noting that 2024 is an off year for the biannual General Manager conference, which incurs significant costs.
Looking further ahead, Raymond James has introduced a 2026 EPS estimate of $1.50 for Chipotle. This estimate assumes a 5.0% increase in comps, the opening of 375 new units representing a 9.0% net growth, improved store margins of 26.8%, general and administrative expenses of $748.5 million, and an EBITDA of $3.07 billion, also up 16% year-over-year.
The raised 12-month price target of $72 is justified by a 2026 price-to-earnings (P/E) ratio of 48 times, which aligns with the higher end of Chipotle's historical valuation range of 38 to 52 times. The firm believes that investors will likely shift their focus to the 2026 EPS projections for companies with clear growth trajectories in the upcoming quarters.
Chipotle is lauded for its robust growth profile, characterized by a strong value proposition, consistent mid-single-digit comp growth, and high single-digit yearly unit growth supported by superior new unit return on investments. The company's ability to maintain a competitive price point for core offerings, such as the chicken burrito or bowl, which remains under $10 in most markets, contributes to its high-quality growth stock status.
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