Barron’s reported this past weekend that one stock in particularly could stand to see a drop of as much as 35% in the next year.
What stock could potentially see a big decline in share price? It’s Chipotle.
According to Barron’s, Chipotle Mexican Grill is moving beyond a sales decline caused by widespread 2015 outbreaks of tainted-food scandals but its stock is now over valued.
Barron’s said that the burrito chain’s shares have gained 8 percent in the past three months to $404 amid an activist led board shuffling, but still trade at 49 times the consensus earnings estimate for 2017.
“A healthy return for investors from here would require either that Chipotle blast past growth estimates in coming years or that shareholders maintain their enthusiasm as growth slows,” said the paper.
“There are 27 analysts who are offering 12-month price targets for Chipotle shares, with a median of $400 a share and a high of $564,” Chris Arnold, a spokesman for Chipotle said in an email.
“We don’t speculate about what the stock might do, nor do we comment on daily stock price fluctuations. We have made significant progress in our recovery and are optimistic in the strategy we have set out for 2017,” Arnold said.
Disclaimer: We have no position in Chipotle Mexican Grill, Inc. (NYSE: CMG) and have not been compensated for this article.