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UPDATE: Oppenheimer Reiterates On Chipotle, Shares Climb Higher

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Why Chipotle is a Sell at Present Valuation (GuruFocus)

In a report published Thursday, Oppenheimer analyst Brian Bittner reiterated an Outperform rating and $625.00 price target on Chipotle Mexican Grill (NYSE: CMG) highlighting “unique catalysts.”

Bittner wrote, “We believe Chipotle Mexican Grill (CMG) represents an attractive investment opportunity with a combination of best-in-class unit growth and near-term operating momentum. Our analysis highlights unique catalysts for improving traffic, expanding margins and earnings upside. With shares at ~30x 2015E P/E, we find valuation attractive, especially considering CMG's untapped long-term growth optionality and an elevating ROIC profile that is already far above its more expensive non-franchised peers.”

The analyst remarked that shares currently represent an attractive entry point, down 18 percent since mid- March. He added that Chipotle's power pricing is “real” with price increases not effecting store traffic or customer push-back.

Oppenheimer's analysis shows the company's opportunity of having tremendous margins and comps. The analyst sees a 28 percent floor on restaurant margins in 2015 and believes comps will achieve double digits in the third quarter versus consensus estimates of nine to ten percent.

Bittner increased 2014 and 2015 EPS estimates from $12.21 and $16.64 to $12.98 and $16.85, respectively.

Shares of Chipotle closed at $504.18 on Wednesday. The stock has traded as high as $524.31 on Thursday, up four percent. Shares are currently trading at $522.84, up 3.7 percent.

Latest Ratings for CMG

May 2015BMO CapitalUpgradesMarket PerformOutperform
Apr 2015CitigroupMaintainsBuy
Apr 2015BarclaysMaintainsEqual-weight

View More Analyst Ratings for CMG
View the Latest Analyst Ratings

Posted-In: Brian Bittner OppenheimerAnalyst Color Reiteration Analyst Ratings


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