Chipotle Mexican Grill Inc. (CMG): Upgraded To Overweight From Underweight

Morgan Stanley is making an interesting call on Chipotle Mexican Grill Inc. (NYSE: CMG), double upgrading the stock to Overweight from Underweight while raising their target to $111 (prev. $76).

Chipotle Mexican Grill Inc. will be the leading restaurant growth stock of any meaningful market cap, based on the firm's work only 40% saturated in the US, with the ability to at least double and perhaps triple its current store base. That growth potential, combined with its current rate of growth should command a valuation commensurate with that superior growth; which is not yet the case as of now. 2010 EPS consensus is too low by ~10% just holding current margins flat. CMG has more pricing power than investors believe and will use that to defend margins in 2010.