Chipotle Mexican Grill Stock Slammed with Downgrade

Year-over-year, the security already sports a 59.1% lead

Digital Content Manager
Aug 16, 2021 at 10:14 AM
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The shares of Chipotle Mexican Grill, Inc. (NYSE: CMG) are down 0.9% to trade at $1,871 at last check, after the restaurant chain received a downgrade from Raymond James to "outperform" from "strong buy." The analyst in question cited the company's valuation, after shares added 37% over the last six weeks. Still, the firm also raised its price-target to $2,025 from $1,800.  Plus, the company announced it will be increasing minimum hourly wages in Canada starting today.

Analysts were already optimistic towards Chipotle Mexican Grill stock, with 16 of the 24 in question carrying a "buy" or better rating, while eight call it a tepid "hold." Meanwhile, the 12-month consensus target price of $1,841.66 is a 2.4% discount to current levels. 

The equity is just now cooling off from an Aug. 5, record high of $1,912.18, as overhead pressure emerges at the $1,890 level. The $1,850 mark seems to be providing a floor for the shares, though, while the 20-day moving average has been a solid source of support since June. Year-over-year, CMG still boasts an impressive 59.1% year-over-year lead.

The options pits are firmly in the bullish camp, with a strong appetite for calls. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), CMG's 50-day call/put volume ratio stands higher than 95% of readings from the past year. This mean  long calls are getting picked up at a faster-than-usual rate.

Now seems like an opportune time to bet on CMG's next move with options. The stock's Schaeffer’s Volatility Index (SVI) of 22% stands higher than just 4% of readings from the past year, indicating options traders are pricing in low volatility expectations at this time.

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