Chipotle Mexican Grill is experiencing a decline in its stock price following a less-than-expected sales growth forecast, which has raised concerns among investors. The company reported that its comparable sales growth for the fiscal year is expected to be in the low- to mid-single-digit percentage range, falling short of the 5.2% growth anticipated by analysts. This tepid sales forecast comes as Chipotle has been navigating an industrywide slowdown in customer traffic, setting a high bar for itself by previously outperforming its peers.
Additionally, Chipotle is facing potential cost pressures due to its reliance on avocados imported from Mexico. The company has warned of a possible 60 basis points increase in raw material costs if U.S. tariffs on Mexican imports are implemented. While Jefferies analysts suggest that the impact of these tariffs on margins might be moderate, the uncertainty surrounding the situation has contributed to a cautious outlook. Several brokerages have responded by lowering their price targets for Chipotle, reflecting the challenges the company faces in maintaining its growth trajectory.
As of 8:42 am on February 5th, Chipotle's stock is trading at $55.62, down 5.76% from its previous close of $59.02.