Today, JP Morgan Chase & Co (NYSE: JPM) initiated coverage of Guzman y Gomez (ASX: GYG) shares.
Guzman y Gomez is a Mexican-themed casual fast-food restaurant. It currently has over 250 restaurants across 4 countries. The majority (225) of its stores are currently located in Australia. Management has set the ambitious goal of reaching 1,000 restaurants in Australia.
Approximately a year ago, Guzman y Gomez made its debut on the ASX.
In the months that followed, its share price rocketed. By December 2024, it had already gained nearly 50%, strongly rewarding its early shareholders.
However, 2025 has been less successful for investors. Guzman Y Gomez shares are down nearly 30% for the year to date.
Investors may be wondering whether the fast food retailer has further to fall or if it is a buying opportunity.
Image source: Getty Images
JP Morgan initiates coverage on Guzman y Gomez shares
On 7 July, JP Morgan initiated coverage of Guzman Y Gomez shares. This marks the first time the broker has analysed the company's history, considered its future prospects, and provided a valuation of the stock.
JP Morgan has placed an underperform rating on the stock and set a price target of $24.00.
Guzman y Gomez shares are currently changing hands for $28.46. This suggests they will decline over the next 12 months.
The broker cited management's ambitious 1,000-store goal (and how long it might take to achieve it) when issuing this target:
GYG is in a sweet spot of its growth phase, with a well-established Australian store network of ~225 stores, having proven its store economics within a competitive QSR industry, yet with an accelerating pace of store openings ahead. The broad appeal of the GYG brand and ability to generate superior sales per store gives us confidence they can execute on a ~30-40 p.a. store roll-out pace over the next 5-10 years, but 1,000 stores is optimistic.
JP Morgan believes the company can achieve around 800 stores by FY40, given the population density across each Australian region.
The broker suggested the suburbs of capital sites would be the key driver of growth. It specifically named Sydney, Melbourne, Brisbane, and Perth as primary targets. Meanwhile, JP Morgan considers rural areas far less attractive due to the logistical challenges of expanding into areas without stores in nearby locations.
What are other experts saying?
Morgan Stanley appears to be more optimistic than JP Morgan. Last week, The Motley Fool's James Mickleboro revealed that the broker had retained its overweight rating and $41.90 price target on Guzman Y Gomez shares. Morgan Stanley is forecasting sales to grow at a compound annual growth rate of 20% per annum through to FY30, driven by store network expansion and market share gains.
