Ahead of the Bell: Chipotle sees slower growth
NEW YORK -- The lightning-fast growth years for Chipotle stock may be done for now.
Its shares, which dipped below $40 in late 2008 as the financial crisis intensified, peaked this April at $442.40 as the burrito chain posted double-digit increases in revenue year after year.
But Chipotle Mexican Grill Inc. on Thursday forecast that revenue growth in stores open at least a year would be flat to a low-single-digit percentage gain next year. That's down from this year, when it expects the metric to be in the mid-single-digits. The measure grew 11.2 percent last year. Revenue in stores open at least a year, which strips out the impact from new and closing stores, is key for retailers because it reveals ongoing business trends.
Shares closed Thursday at $285.93, down 15 percent this year. They sank another 13 percent, or $35.93, to $250 in premarket trading Friday.
Credit Suisse analyst Karen Holthouse said customer traffic was a concern and appears to be decelerating. She lowered her price target by $100 to $290.
Wedbush analyst Nick Setyan cut his rating on the Denver-based chain to "Neutral" from "Outperform," saying that he no longer thinks that Chipotle will raise prices. That could have given sales a boost and helped offset the company's higher costs for ingredients like cheese, meat and rice.
In the third quarter, which ran from July through September, revenue and net income both grew, but growth slowed from a year ago, and results missed analyst expectations.