Chipotle Mexican Grill cut at Wedbush on slowing transaction growth trajectory

Wedbush downgraded shares of Chipotle Mexican Grill (NYSE:) to Neutral from Outperform in a note Thursday covering the restaurant sector, raising the price target for the stock to $2,400 from $2,200.

Analysts believe a slowing transaction growth trajectory at CMG as 2024 progresses may jeopardize its current valuation.

“While we view a consumer more focused on check management as a threat, we also point to the ongoing Carne Asada LTO vs. last year’s relatively lackluster Garlic Guajillo LTO as a driver of near-term transaction growth outperformance,” analysts wrote.

“We are incrementally cautious as the timing of Carne Asada’s end largely coincides with CA’s price increases,” they added.

Wedbush believes a premium is justifiable given the current annual EPS growth algorithm of 20%+ compared to its pre-COVID 10-year EPS growth CAGR of 13.5%.