Piper Sandler lowered its price objective for Chipotle Mexican Grill (CMG) to $44.00 from $47.00 but maintained an Overweight rating after the chain released fourth-quarter results and initial guidance for fiscal 2026. The shares are trading at $38.67 and carry a reported price-to-earnings ratio of 34.44; InvestingPro data cited a PEG ratio of 12.14, indicating elevated valuation relative to near-term earnings growth expectations.
Chipotle disclosed that same-store sales declined 2.5% in the fourth quarter of 2025, a result that aligned with market expectations. Management issued guidance for the full fiscal year 2026 that targets approximately flat same-store sales growth. The company also recorded revenue growth of 5.41% over the last twelve months, according to InvestingPro.
For the first quarter of 2026, Chipotle said it expects same-store sales to decrease in a range of 1% to 2%, with management signalling sequential improvement as the year progresses. The conservative nature of the initial sales outlook disappointed some analysts who had anticipated stronger near-term demand.
Piper Sandler commented that the guidance "speaks to the idea that underlying restaurant industry demand has not gotten better; at least not yet." While the research firm characterized the top-line outlook as a disappointment, it did not explicitly classify the guidance as conservative or otherwise calibrated with hidden upside or downside.
The company plans to underprice expense inflation in 2026, a tactical choice that Piper Sandler described as "wise" from a traffic perspective. The firm noted, however, that deliberately absorbing some expense pressure affects estimates for restaurant-level margins and will have implications for margin modeling going forward.
Chipotle's reported fourth-quarter 2025 results beat consensus on adjusted earnings per share, with adjusted EPS of $0.25. Same-store sales for the quarter were down 2.5% as noted above. Management also benefited store-level margins through a $27 million boost tied to an analysis of gift card breakage, which favorably impacted margin metrics in the period.
Despite the quarter's upside on earnings and the gift card-related margin lift, the company set a conservative tone for 2026 by forecasting flat comparable sales, a stance that has generated skepticism among some investors.
Analyst responses to Chipotle's results and guidance varied across the sell-side. KeyBanc Capital Markets trimmed its price target to $42 while retaining an Overweight rating, citing the stronger-than-expected sales and margins in the quarter. Bernstein SocGen Group reiterated an Outperform rating with a $50 price target and noted confidence in Chipotle's long-term prospects despite cautious near-term guidance. Goldman Sachs kept a Buy rating and a $46 target, pointing to menu innovation as a contributor to recent results. By contrast, Mizuho lowered its target to $37 based on the softer same-store sales outlook, and Barclays reduced its price target to $40, citing headwinds from comparable sales and cost pressures.
Context and implications
The immediate market response included analyst price-target revisions spanning a wide range, reflecting differing views on how to balance the company's recent margin improvements and menu progress against the muted sales forecast for 2026. Piper Sandler's decision to downgrade the price target while keeping an Overweight stance encapsulates that tension: the firm sees value but accounts for a tepid near-term demand environment.
What remained unchanged in the reporting - Chipotle delivered an adjusted EPS beat in the quarter and disclosed a one-time $27 million uplift to store-level margins tied to a gift card breakage review. The firm reported 5.41% revenue growth over the prior twelve months even as comparable-store sales were negative in the quarter.
Bottom line
Investors and analysts are parsing strong margin dynamics and a modest revenue increase against a cautious same-store sales outlook. The mix of positive earnings surprise and conservative near-term guidance has produced divergent analyst targets and a range of views on Chipotle's trajectory for 2026.