Why Did Chipotle Stock Rise After-Hours Today?

A key analyst says "a lot of the bad has already been priced in" after the restaurant chain's shares slid on its lowered outlook.

Chipotle Mexican Grill’s (CMG) shares climbed 1% in after-hours trading Monday after Jefferies upgraded the stock, citing its recent pullback, which alters the risk and reward.

The research firm upgraded the shares to 'Outperform' from 'Neutral,' but lowered the price target by $3 to $50. The latest target implies an over 20% upside to the stock's last closing price.

Chipotle stock currently trades near a 20-month low. It has fallen by over 21% in the last two weeks after the Mexican food chain's quarterly report.

On July 23, Chipotle reported worse-than-expected quarterly sales and lowered its topline outlook for the full year, citing weak dine-out trends due to economic uncertainty.

President Donald Trump's policies, particularly tariffs, are seen as fueling inflation and squeezing businesses, prompting consumers to rein in spending.

"There are certain cohorts of the consumer, definitely on the lower-income side, that are feeling pressure right now. That's something that we'll have to take into consideration when looking at price going forward," CFO Adam Rymer had told Reuters at the time.

In its investor note, Jefferies said, "a lot of the bad has already been priced in."

The firm cited an improved risk-reward for the upgrade, as it now sees over 20% in a base case that assumes Chipotle will post comparable growth of 3% over the next two years.

On Stocktwits, the retail sentiment for CMG remained 'neutral' as of late Monday, the same as the previous day. "I'm putting $CMG on bounce watch," a user said.

https://stocktwits.com/GSP/message/624687773 

CMG stock is down 31% year-to-date.

For updates and corrections, email newsroom[at]stocktwits[dot]com.