UBS has reaffirmed its Buy recommendation on Chipotle Mexican Grill (NYSE:CMG), keeping a $45.00 price target while flagging expected margin headwinds that extend from the fourth quarter and into 2026.
The UBS note, penned by analyst Dennis Geiger, projects fourth-quarter restaurant-level margins of 23.0% - a decline of 170 basis points year over year and a touch below the market consensus estimate of 23.1%. UBS attributes the compression to a combination of challenged sales, increased investments in marketing and elevated beef costs, with those negative forces only partly offset by efficiency gains in operations.
For context, Chipotle's gross profit margin across the last twelve months stands at 40.19%, underscoring a still-robust top-line profitability profile even as restaurant-level margins are under pressure.
Looking further ahead, UBS expects commodity inflation to continue exerting pressure on margins through 2026. The firm models 2026 margins at 24.5% - a figure that aligns with consensus but represents an 80-basis-point decline year over year. UBS notes that pricing actions by the company will not fully offset rising input costs, estimating Chipotle's effective pricing power at only 1.1% versus a mid-single-digit rate of cost inflation.
On the earnings front, UBS's models call for fourth-quarter earnings per share of $0.24 and project EPS of $1.20 for 2026.
Despite these near-term headwinds, UBS maintained its Buy rating, signaling continued confidence in Chipotle's longer-term prospects. The firm's price objective sits close to InvestingPro's Fair Value assessment, while the prevailing analyst consensus remains positive with a recommendation score of 1.7 on the scale where 1 is Strong Buy.
Other analyst updates and company developments
Several other brokerages have issued recent updates on Chipotle. Piper Sandler increased its price target to $47.00 and kept an Overweight rating ahead of the company's fourth-quarter 2025 earnings report. Investor expectations are currently for a 2.5% decline in same-store sales, which is marginally better than the consensus projection of a 3.0% decrease.
KeyBanc Capital Markets reaffirmed an Overweight rating with a $45.00 price target, though it trimmed its 2025 earnings-per-share estimate in response to a softer sales and margin outlook. Telsey Advisory Group also restated its Outperform rating and set a $50.00 price target, highlighting Chipotle's runway for global expansion and meaningful growth opportunities within North America.
On the corporate leadership front, Chipotle announced the appointment of Ilene Eskenazi as Chief Legal and Human Resources Officer, an expansion of her prior responsibilities. That change follows the departure of Roger Theodoredis as Chief Legal Officer and General Counsel. Separately, Stephanie Perdue, Vice President of Brand Marketing, will serve as interim Chief Marketing Officer following the exit of Chris Brandt. The company framed these moves as part of ongoing strategic and leadership adjustments.
Takeaway
UBS's maintained Buy and $45.00 target reflect a view that Chipotle's fundamental franchise remains intact, even as the company navigates margin pressures driven by commodity costs, marketing spend and softer sales. The combination of analyst updates and management changes provides investors with a range of near-term considerations - from same-store sales trajectories to the pace of cost inflation - that will shape sentiment ahead of upcoming earnings releases.