Morgan Stanley Cuts Chipotle Price Target to $49 After Q4 Sales Decline
Morgan Stanley cut its price target for Chipotle Mexican Grill to $49 from $50 while maintaining an Overweight rating after Q4 results showed a 2.5% same-restaurant sales decline. The revision reflects a 3.2% drop in transactions partially offset by 0.7% average check growth.
1. Analyst Rating Revision
Morgan Stanley lowered its price target for Chipotle Mexican Grill to $49 from $50 and maintained an Overweight rating following the chain’s Q4 earnings release. The firm cited softer transactions and a modest sales decline as key drivers for the adjustment.
2. Fourth-Quarter Performance Highlights
Chipotle reported adjusted earnings per share of $0.25 versus a $0.24 consensus and revenue of $2.98 billion against a $2.96 billion estimate. Comparable restaurant sales fell 2.5% year-over-year, driven by a 3.2% drop in transactions, while average check rose 0.7%.
3. Pricing Strategy Backdrop
CEO Scott Boatwright noted that 60% of core diners have household incomes above $100,000, reinforcing the chain’s confidence in further price increases. This demographic insight underpins management’s strategy to lean into higher-income customer segments.