2 Analysts Praise Chipotle Stock Before Earnings

There's still plenty of room on CMG's bullish bandwagon

Managing Editor
Oct 21, 2019 at 10:28 AM
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Food chain Chipotle Mexican Grill, Inc. (NYSE:CMG) is starting the week off on the right foot, thanks to a fresh dose of analyst praise. Ahead of earnings, which are slated for release after the close tomorrow, Oct. 22, brokerage firm BTIG hiked its price target to $890 from $845. The analyst said margins and comparable-store sales could hit "historic levels" and expects carne asada steak to bolster traffic and the average check size of customers. Meanwhile, Loop Capital lifted its price target to $950 from $860, and also called the carne asada addition "a hit."

Now up 0.5% at $846 on the day, Chipotle stock has been climbing the charts long term as well, evident by an impressive 96% year-to-date lead. The 60-day moving average recently emerged as a line of support for the shares, and CMG touched a record peak of $857.90 on Sept. 9, though it has seemingly run into a speed bump in the $850-$860 area.

In terms of the company's earnings history, CMG has closed higher the day after reporting in all but three of the past eight quarters, averaging a 10% swing, regardless of direction. This quarter, the options market looks to be eyeing a similar post-earnings shift, pricing in a 10.6% move.

As far as direction, near-term traders are put-skewed at the moment, based on the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.93. This reading ranks in the 82nd percentile of its annual range, showing such a preference for short-term puts over calls is relatively rare. Further, peak put open interest sits at the November 350 strike, where 2,300 contracts reside.

Despite CMG's impressive rally in 2019, there's room for more upbeat analyst attention. Currently, 16 of 26 analysts still carry a "hold" or worse rating. Likewise, the consensus 12-month price target of $821.77 represents a discount to current levels, leaving the door open for additional price-target hikes on an earnings beat.

 


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