Making Dollars and Sense of Chipotle's New Price Targets
A stock split doesn't just adjust a publicly traded company's price and how many shares its investors own. Analysts also need to revise their profit targets to keep up with the new math.
It's been three weeks since Chipotle Mexican Grill (NYSE: CMG) executed its 50-for-1 stock split. The seamless transaction replaced every single share at the old price with 50 new shares at 2% of the former price. It's a zero-sum game, but many analysts didn't make the same tweak on their end.
Jeffrey Bernstein at Barclays became the latest Wall Street pro to update his price goal after the split. His note on Wednesday morning replaces the earlier target of $2,865 with $58. If this was an actual 50-for-1 revision, the new price would've been $57.30. It's natural to avoid going right of the decimal, but it's telling that Bernstein chose to round up to $58 instead of taking the shorter path down to $57.
Source Fool.com
