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Is It Finally Time to Buy Chipotle Stock?

By Rick Munarriz | September 04, 2025, 10:48 AM

Key Points

  • An analyst upgraded shares of Chipotle on Wednesday.

  • The stock is trading for 29 times next year's projected earnings, a historical bargain for the iconic chain.

  • Guidance already suggests that comps will turn positive in the second half of this year. The narrative is changing.

When Chipotle Mexican Grill (NYSE: CMG) introduced its Adobe Ranch premium add-on sauce in June, the burrito roller claimed that it was its first new dip since its reformulated Queso Blanco rolled out five years ago. Investors know that this isn't entirely true. There have been plenty of dips for the restaurant stock. All you have to do is check the five-year stock chart.

Chipotle may be a classic growth stock, but it's up a modest 60% over the past five years. The haul over the last three years is half that. A big reason for the surprisingly pedestrian returns is that Chipotle shares have shed a quarter of their value over the past year. It gets worse. Draw the starting line at mid-June of last year -- when the stock hit an all-time high just days before its 50-for-1 stock split was executed -- and the fast casual chain has plummeted 40%.

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There are some good reasons for the downticks, and I'll get there. However, has Chipotle fallen far enough to make it too tasty to ignore? Forget Adobe Ranch, Queso Blanco, and even the famous guacamole. Is this the dip that you as an investor have been waiting for? One analyst seems to think so.

Putting the "up" in upgrade

Chris Luyckx at Rothschild & Co Redburn upgraded Chipotle on Wednesday. He's sticking with his earlier $55 price target, but with the shares now lower he is bumping his rating from neutral to buy. This represents 32% of near-term upside from current levels, but don't go calling this an upgrade based on convenience. He could have also just lowered his price target and kept a ho-hum rating on Chipotle if he felt the downticks were warranted.

Luyckx concedes that Chipotle is going through a rough patch. After years of positive comps, same-restaurant sales have been negative through the first half of this year. The analyst feels that the recent slump isn't a sign that there are structural shortcomings to the Chipotle model. He feels that the store-level retreat is cyclical in nature. With a strong brand and loyal fan base, Chipotle is positioned well to regain traffic and market share once economic concerns being to ease.

Someone eating a tinfoil-wrapped burrito.

Image source: Getty Images.

Chipotle itself seems to agree that things will get better sooner rather than later. Speaking on CNBC's Mad Money last week, CEO Scott Boatwright was confident that the chain can return to the mid-single-digit comps growth that it has historically averaged until the recent pullback. He argues that Chipotle's marketing approach is already improving and that its overall strategy can use some fine-tuning to win in this challenging climate.

Thursday's rollout of carne asada -- bringing back the limited-time protein for the first time in two years -- is a fair indicator that Chipotle isn't standing still. If there's one thing that the chain learned when Brian Niccol was at the helm until last summer, it's that the founding team's approach of menu rigidity doesn't work in the new normal.

Chipotle may already be turning the corner. After starting the year with a 0.4% decline in comps for the first three months of the year followed by a head-turning 4% slide in the second quarter, guidance it issued this summer is encouraging. It sees comps for all of 2025 clocking in about flat, implying that store-level sales will be mildly positive in the second half to counterbalance the 2% slide through the first six months of this year.

Cheap is relative

A point raised by Redburn's analyst is that Chipotle has settled itself in nicely as a cheaper meal option in the fast-casual space that has been overtaken by premium salad spinners and pricy Mediterranean concepts that Luyckx estimates charge 25% to 30% more. It's against this backdrop that many fast-food chains have abandoned their dollar menus, pushing prices higher for signature offerings to the point where opting for Chipotle only comes at a modest premium.

It's not just a meal at Chipotle that has become relatively cheaper. The stock itself is historically cheap. Chipotle is trading for 31 times forward earnings and less than 30 times next year's profit target. It's not a low multiple for value investors, but Luyckx points out Chipotle hasn't traded this low on a forward basis for an entire year since 2015. The obvious counter to that is that future growth projections are lower for the more mature Chipotle now. However, the case for investing in Chipotle is more compelling right now with the stock moving lower as its comps are about to turn positive.

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Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill. The Motley Fool recommends the following options: short September 2025 $60 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.

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