Chipotle Stock Falls on Downgrade

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Chipotle (NYSE:CMG) stock was falling Monday following a downgrade from an analyst.

Chipotle Stock Falls on Downgrade

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The blow to Chipotle stock comes from Wedbush analyst Nick Setyan. A recent note from the analyst has him downgrading CMG stock from its previous “Neutral” rating to a new “Underperform” rating.

It wasn’t just the downgrade that hurt Chipotle stock on Monday. Setyan’s note also includes a new price target for CMG stock. The analyst cut the price target that Wedbush has for CMG stock from $450 to $445.

Setyan’s downgrade and price target cut for Chipotle stock weren’t without reason. The analyst says that he believes CMG will report weaker same-store sales growth during the third quarter of 2018 than what analysts are expecting. He says this has to do with a recent illness outbreak at the restaurant chain.

Setyan also notes that he has concerns about Chipotle’s performance through 2020. According to the analyst, the company is going to face additional pressure on its  profits margins through the end of 2020, reports CNBC.

Other concerns that Setyan has about Chipotle stock is in connection to its product lineup. He claims that the chain may suffer from delays to its product innovation. This could result in the menu becoming stale and customers losing interest in the chain. However, he does expect some benefits from its marketing push and digital efforts, but not enough to keep it from the downgrade.

CMG stock was down 4% as of Monday afternoon, but is up 77% year-to-date.

As of this writing, William White did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2018/08/chipotle-stock-falls-on-downgrade/.

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