{{articledata.title}}

Investing.com -- Loop Capital lifted its rating for Chipotle Mexican Grill (NYSE:CMG) to Buy from Hold on Friday, citing a recent pullback in its share price as creating an "attractive buying opportunity". 

The stock has declined nearly 10% since the firm’s previous report in February, and analysts believe this offers investors an opportunity to buy into the stock at a favorable price.

The firm has set a price target of $65, based on a ~35x EV/EBITDA estimate for 2025. 

Loop Capital's confidence stems from Chipotle's strong performance in comparable sales growth, having reported “in-line or better-than-expected” results for the past eight quarters.

Analysts point to several factors contributing to this success, including the shift toward higher volume Chipotlanes, improvements in throughput during peak hours, and a steady LTO (Limited Time Offer) platform. 

In particular, they point to the fact that the company’s 2-year stack has held steady, showing a 15.3% growth in 2024 compared to 15.9% in 2023.

Despite some early-year challenges, including unfavorable weather conditions, Loop Capital is optimistic about the company's ability to recover, especially with the expected launch of honey chicken as a new LTO in March. 

They also note that if Chipotle maintains its 15.0% 2-year stack in 2025, there could be upside of $0.10 to the current EPS estimate of $1.30.

Additionally, the company has “manageable tariff risks,” as only about 2% of its total inputs come from Mexico, mainly avocados. 

Despite potential tariff headwinds, Chipotle could implement price increases to offset the impact, with the firm projecting 2.0% higher menu prices for the year.

Loop Capital is maintaining its comparable sales and EPS estimates for 1Q25, 2025, and 2026, while remaining confident in the company's future growth potential.

This content was originally published on http://Investing.com