Mizuho Serves Bullish CMG Upgrade, Concerns Still Pile on Chipotle's Plate

0:00We're back on Morning Trade Live. Let's focus on Chipotle. The stock is ticking higher today after an upgrade. Alex will have more on that in just a second, but the stock has struggled over the last year and changed. It's down 10% so far in 2026. And after executing a 50 for one stock split in June of 2024, Chipotle has shared nearly 50% of its value. But we are up in trade this morning currently sitting at 1.7% higher on CMG. So that's the focus of the Morning Trade. Joining us now for a closer look at this is Alex Coffee. Very good morning to you, Alex. So Chipotle is higher today after an upgrade. Just walk us through the details of what went behind this call. Yeah, good morning to you as well. Sam, happy Friday. I love the call out on the split, almost marking the top for this. Just to serve as a reminder that these stock splits don't always lead to more upside. In fact, they just are accounting move. Same value for the company. Just more shares outstanding. All that to be said though, Nick Settian,

1:00over at Mizzouho upgrading to outperform from neutral. Now he joined 71% of his peers who are in a bi equivalent camp, adjust the price target up from 37 to 40, seeing an inflection in the comps for Chipotle in the near term along with incremental margin visibility, saying that the quarter one earnings report in the quarter two to date commentary offer positive potential catalyst and site strong channel checks as well, saying that the firm Mizzouho ups their quarter one same source sales growth estimate from flat or two flat rather from negative four tenths of 1%. And that's well above the consensus figures on the street right now, which call for a negative 1.1% comps for sales growth for Chipotle in quarter one. They say importantly, trend strengthened as the quarter has progressed on, pointing to strong quarter two traffic and comp upside.

2:03And they now expect Chipotle's sales to accelerate as 2026 progresses with easier comparables ahead. And they say to the company's cycle of lower margin revisions is almost at an end. This is a very, very positive note. It's still calling for a turn point. So take it with the grain of salt is what I would say. But they say that the valuation currently reflects a overly pessimistic valuation for the stock. And perhaps if you believe the words from Nick over at Mizzouho, there's opportunity to add some risk here in Chipotle. All right, it looks like it's been rewarded today or at least the street likes it, likes the note. Thanks so much for that, Alex, and getting us across the details of what went behind that call. Let's trade Chipotle now with Dan Deming, managing partner at KKM Financial, Dan. Happy Friday to you. How would you approach an example trade for this name? Yes, Sam. I think Alex pointed out some key metrics there as far as the possible price action we may see here before it finds a meaningful bottom.

3:03I mean, longer term, I still think yes, there's probably an opportunity here. But the trade example today is to buy some time, see how this price action unfolds after it made a short term temporary bottom. But I'm still not convinced it might not test those lows from last year. So today's trade example is just selling a May putt. That's about 56 days out. You can sell them May 32 half putt for about $2.05. That's a 6% return versus the stock over the next 56 days. So you get to collect some premium and generate a return versus the stock and then have the opportunity to get put in the stock at what I would perceive as a better level down around that 30 half level, which is to me a more meaningful support level. And I think a foundation where maybe we'll find further upside later in the year. Okay, a good look at Chipotle for us for this Friday. Some Friday cheer for this name and across the space in what is otherwise a broadly down market today, Dan.

4:04I know obviously traders have been eyeing that 200 day, seeing if it could hold. I know we're just below that. Obviously now we do typically see, particularly in the last month, do risking going into the weekend because of course anything can happen when the market is closed, thoughts on the market today? Yeah, I mean, right now the major head went to me, Sam, is the reversal in interest rates. We, you know, that's been unfolding throughout the last several sessions as we get past the Fed meeting, showed under the curve moving up to the highest levels since the last July. And now we're seeing the back on the curve moving higher today. So that's a major headwind for this market. We're just going to see if we can hold that 200 day moving average and hold these levels, given the fact that to me, that's a pretty strong headwind heading into the weekend. And as you pointed out, de-risking typically has been the theme going into weekends. So I think interest rates are the story today. Yeah, we've got the 10 year, what, at 4.30 right now, just above that, certainly we have this global reprising

5:05of rates right now, given of course, the situation in Iran, what we've heard from the central banks, Dan, really appreciate your time. Thank you so much. Have a great weekend, Dan Deming there, Managing Partner KKM Financial.