JPMorgan analyst Bryan Raymond has upgraded Guzman y Gomez from “underweight” to “neutral”. The upgrade comes as Raymond sees reduced valuation pressure following a share price decline to its initial public offering (IPO) level, combined with a de-rating across the global quick service restaurant sector. Guzman y Gomez is an Australian fast-food chain specialising in Mexican cuisine. The company operates and franchises restaurants across Australia, Singapore, Japan, and the United States.
Raymond has also increased the 12-month price target for Guzman y Gomez shares, setting it at $23.40, a slight rise from the previous target of $23.10. According to Raymond, the market is now factoring in greater risk associated with the company, which provides a safety net should Guzman y Gomez fail to achieve its long-term objectives. He pointed to the company’s store network expansion at an early stage and its robust unit economics.
While headline earnings multiples appear high, Raymond suggests that this is due to anticipated future growth. He believes that a more appropriate valuation comparison to peers can be made by looking at fiscal year 2026 EBITDA and price-to-earnings ratio multiples. Raymond also noted the potential for the share price to reach $27 if the Australian chain mirrors Chipotle’s long-term success.
For a more positive outlook, Raymond identified three key areas needing improvement: accelerating same-store sales growth (SSSg) through 24/7 operations and product innovation, reducing emphasis on ambitious long-term targets, and re-evaluating the US strategy, potentially involving an exit from or pivot away from the Chicago test market. Guzman y Gomez shares closed at $21.97 on Tuesday.
