Market Overview

UPDATE: Wedbush Cuts Down Chipotle, Shares Break Below $500‏

Related CMG
Fast Money Traders Share Their Opinions On El Pollo LoCo
Analysts Mostly Agree on El Pollo Loco's Growth Potential, But Disagree On Valuation
When Rate Hikes Come, They Will Ripple Across U.S. Economy (Fox Business)

In a report published Friday, Wedbush analyst Nick Setyan downgraded Chipotle Mexican Grill (NYSE: CMG) from Outperform to Neutral and maintained a $510.00 price target.

Setyan commented that Chipotle's initiatives, mid-2014 price increase and catering roll out is reflected in the company's outperformance of 48.5% since early 2013. The analyst noted that the upside from expected mid-2014 price increase is “well-understood” to coincide with the 3-5% price increase for genetically modified organism (GMO)- free ingredients. Wedbush reported, “Given food inflation ahead of expectations in Q3 and guidance for cost of sales between 33.5-34.0% of sales over the next several quarters, we believe pricing at the high end of the indicated 3-5% range is likely. We estimate the contribution from an incremental 1% price increase relative to our 3% expectation would equal an incremental ~$0.19/quarter in EPS.”

Wedbush estimates that fourth quarter SSS growth will be in line with expectations at 6-7%. Setyan reported fourth quarter EPS estimate of $2.56 versus consensus of $2.52. The analyst expects $820 million in revenue versus consensus of $826 million. Setyan added that catering will add 75 bps to current AUVs and an additional $0.23 in annual EPS at 50% incremental margins.

Chipotle will host a conference call to discuss results on January 30 at 1:30 p.m. PT. Investors and the general public can listen in at (888)401-4674.

Shares of Chipotle closed at $503.45 on Thursday.

Posted-In: Nck Setyan WedbushAnalyst Color Downgrades Price Target Analyst Ratings

 

Related Articles (CMG)

Around the Web, We're Loving...

Partner Network

Get Benzinga's Newsletters