BofA-Merrill Lynch thinks CMG has overly optimistic EPS estimates
Analysts are weighing in on burrito chain Chipotle Mexican Grill, Inc. (NYSE:CMG), Snapchat parent Snap Inc (NYSE:SNAP), and energy stock Chevron Corporation (NYSE:CVX). Here's a quick roundup of today's bearish brokerage notes on shares of CMG, SNAP, and CVX.
CMG Stock Downgraded at BofA-Merrill Lynch
Ahead of next Tuesday's earnings report, Chipotle Mexican Grill was downgraded to "underperform" from "neutral" and saw its price target slashed to $285 from $390 at BofA-Merrill Lynch, which cited overly optimistic earnings-per-share (EPS) estimates for both 2018 and 2019. What's more, this new price target represents a move to levels not seen since January 2013. In reaction, CMG shares are down 2% $322.75.
Heading into today's trading, CMG stock was already off 34% from its mid-May annual high of $499, with a surge in short selling likely adding to the pressure. Short interest is up almost 47% since early June to 4.95 million shares, and the equity could be at risk of additional losses should bears continue to increase their positions.
Snap Stock Brushes Off Bearish BTIG Comments
BTIG said it has "been wrong" on Snap, and lowered its EPS estimates for the Facebook rival. The brokerage firm maintained its "neutral" rating on the stock, echoing the majority of analysts following SNAP. Specifically, 16 brokerages maintain a tepid "hold" rating, compared to eight "buy" or better ratings, and four "strong sells."
SNAP stock has so far dropped 0.6% to trade at $15.98. Since hitting a record low of $11.28 on Aug. 14, Snap shares have added 42%, though the newly formed 120-day moving average has served as a stiff ceiling over the past week. This trendline is currently docked at $16.56, and the equity has yet to close above it.
BMO Downgrades Chevron Stock on Valuation Concerns
Chevron shares are trading down 0.4% at $119.78, after BMO Capital Markets downgraded the Dow stock to "market perform" from "outperform." CVX settled Tuesday at $120.22 -- in line with BMO's price target -- with the brokerage firm noting growth prospects do not justify an upwardly revised valuation target. SocGen also chimed in on CVX stock, cutting its outlook to "hold" from "buy."
The shares have been soaring since skimming the $103 region in July, up 16%. In fact, the security topped out at a three-year high of $120.89 on Monday. And with its 14-day Relative Strength Index (RSI) closing last night at 74 -- in overbought territory -- a near-term pullback may be in the cards.