MW Why Chipotle's stock could rise more than 20% in the coming year

By Steve Gelsi

BMO Capital upgrades Mexican food restaurant chain's stock to outperform and boosts price target to $65 a share from $56

Chipotle Mexican Grill Inc.'s stock rose Friday as BMO Capital Markets turned bullish on the fast-casual Mexican food company's stock, saying improving consumer sentiment and more workers returning to the office could boost sales.

"We believe value remains best-in-class, supporting relative traffic outperformance in the event of a macro slowdown," BMO analyst Andrew Strelzik said.

Seasonal trends suggest that the company's second-quarter same-store sales could grow by about 3%, which would reverse declines in the past two quarters, he said.

The stock $(CMG.AU)$ rose 0.6% in morning trading. While it has bounced 17.1% since closing at a 15-month low of $45.98 on April 8, it was still down 10.7% in 2025. In comparison, the S&P 500 index SPX has gained 7.1% this year.

Strelzik raised his rating on Chipotle's stock to outperform from market perform, and boosted his price target to $65 from $56. The new target implies about 21% upside from current levels.

Potential upside drivers include enhanced marketing, limited time offers, improvements in consumer sentiment and more workers returning to the office, he said.

The company's "widening gap" to industry performance should warrant a higher valuation, Strelzik said.

BMO's price target for $65 a share for Chipotle's stock would bring its valuation more in line with the restaurant chain's historical average of a price-to-earnings ratio - the stock price divided by expected earnings per share over the next 12 months - of 45, he said.

With Chipotle's next earnings update due out on July 23, Strelzik said he continues to expect a second-quarter profit of 33 cents a share, a figure that's in line with the FactSet consensus estimate.

-Steve Gelsi

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

July 18, 2025 11:52 ET (15:52 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.