UPDATE: Jefferies Upgrades Chipotle Mexican Grill to Hold, Raises PT on HIgh Valuation, Earnings Risk

In a report published Tuesday, Jefferies analyst Andy Barish upgraded the rating on

from Sell to Hold, and raised the price target from $306.00 to $400.00. In the report, Jefferies noted, “Primary rationale for Underperform had been high valuation despite earnings risk from slowing SSS and highly unpredictable commodity cost inflation. This is no longer the case though; more favorable food costs are expected this year and next, and CMG has demonstrated its ability to drive mid-single digit SSS without taking menu price action. Valuation is now 33x our '14 EPS (in line with or below other 20%+ growth companies), and we think fairly balances the company's 20% EPS growth, best-in-class margins & top line momentum with the risk of relatively limited sales drivers and potential food & labor pressures (can't contract forward and we worry labor line could be stretched). We are upgrading CMG to a Hold at a PT of $400 (from $306), or 33x our '14 EPS of $12.24 (consensus $12.93).” Chipotle Mexican Grill closed on Monday at $403.60.