Chipotle’s Softening Sales Force Analyst to Throw in the Towel

(Bloomberg) -- A long-standing Chipotle Mexican Grill Inc. bull has moved to the sidelines, citing concern that a slow start to the fourth quarter suggests softer sales for the year ahead.

TD Cowen analyst Andrew Charles lowered his recommendation on the shares to hold from buy on Wednesday, just ahead of the burrito maker's earnings report next week. He also cut his 12-month price target to a Street-low $32 from $44, while his bear case assumes the stock could drop to $25 per share.

Charles says that while Chipotle's third-quarter results should be slightly better than consensus, medium-term same-store sales forecasts are too high as the brand relies less on price increases to prioritize growing traffic.

"The start of the quarter is showing underlying softness at a time when the business ought to be clicking," Charles, who'd held a buy-equivalent rating on Chipotle since 2019, said in an interview. "Now that we believe that it's more likely Chipotle is going to miss 2027 estimates more materially, we thought now is a good time to move to the sidelines."

Chipotle shares have shed 24% this year and are trading near a three-year low, making it one of the worst performers in the S&P Composite 1500 Restaurants Index, which is down 6.6% in 2026. Restaurant stocks have broadly struggled amid deteriorating consumer sentiment.

Chipotle has seen some success in assuring customers who've grown weary of high-priced "slop bowls" that its prices are justified, an issue that triggered sales declines in recent quarters. The company's latest earnings release showed sales performed better than expected thanks to buzz around limited-time offers like honey chicken, in addition to promotions via its loyalty app.

Still, Charles fears these initiatives may not be enough to overpower macro headwinds while warning that other sales drivers such as high-efficiency kitchen equipment and catering are "less proven," setting the stage for a challenging 2027.

TD Cowen lowered its fourth-quarter same-store sales growth estimate to 1% from 4%, well below the 2.9% gain analysts polled by Bloomberg are expecting. Charles's 2027 projection was cut to 2.1% from 3.8%, compared with the consensus estimate of a 3.1% increase.