Miller Tabak Reiterates Buy Rating, $360 PT on Chipotle Mexican Grill
In a report published Wednesday, Miller Tabak + Co. reiterated its Buy rating and $360.00 price target on Chipotle Mexican Grill (NYSE: CMG).
Miller Tabak noted, “We reiterate our Buy rating and $360 price target on Chipotle Mexican Grill (CMG) despite the lower-than-expected earnings guidance for the December quarter (4Q12) provided late last night. Sales actually were slightly better than we had expected, but a spike in food costs last quarter hurt margins, and we think the Street's focus on margins will keep CMG shares under pressure today. However, we think the worst may be over for food cost inflation as we expect favorable pricing for avocados and dairy products, as well as moderation for some protein costs in 2H13, to lead to food cost inflation that is more benign than expected in 2013. Our four-part bullish thesis on CMG remains intact: (1) mid-single-digit comps supported by what we think will be a 2Q13 menu price increase and now the expansion of a catering menu; (2) more moderate food costs; (3) a robust new unit pipeline for both Chipotle and ShopHouse; and (4) increased share buybacks that we think will provide an incremental boost to EPS in the next couple of years. For these reasons, CMG remains our top pick among restaurant stocks, and given the company's already high short position, we would be buyers on any downside as we expect improved performance in 2013.”
Chipotle Mexican Grill closed on Tuesday at $297.32.
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