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Chipotle Still Worth $750 Per Share, According to BofA; Wedbush Disagrees

Chipotle Still Worth $750 Per Share, According to BofA; Wedbush Disagrees
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Chipotle Mexican Grill, Inc. (NYSE: CMG) saw its shares see-saw following its second quarter print on Tuesday resulting in Wall Street's top analysts issuing mixed conclusions.

Shortly after Wednesday's open, shares were trading at $713.06, up more than 5 percent.

Bank Of America: Shares Still Worth $750

Joseph Buckley of Bank of America commented in a note that Chipotle reported an in-line quarter, despite a labor system challenge.

Buckley noted that the company's earnings per share of $4.45 was "essentially in-line" with his $4.47 estimate and above the Street's $4.44 estimate. Same-store sales were higher by 4.3 percent (despite a 0.3 percent decline in traffic), which was also in-line with his 4 percent estimate, but fell short of broader expectations.

Chipotle indicated that July same-store sales and traffic are positive with comps "consistent" with the single-digit expectations for the quarters.

Buckley also added that the company opened 38 restaurants in the second quarter and 97 in the first half of the year and expects to meet or exceed the high end of its 190 to 205 openings guidance. The analyst pointed out that meeting the high end of the range implies an 11 percent expansion rate.

Bottom line, Buckley made no changes to his Buy rating and $750 price target as the company is still "one of the very few high-growth restaurant stocks."

Wedbush Disagrees; Shares Worth $620

Nick Setyan of Wedbush commented in a note that he remains "wary" of same-store sales growth drivers, especially since throughput was not cited as a "meaningful" contributor in the third quarter. On the other hand, catering is often cited as a driver, but the segment has remained "fairly consistent" as a percent of sales and shouldn't be characterized as an "outsized contributor."

Setyan also pointed that downside to current earnings per share expectations exists if drivers of transaction growth above a mid-single-digit figure in the bottom half of 2015 and 2016 fails to materialize. As such, the stock's current valuation "appropriately reflects lower visibility" into the company's near- and medium-term growth trajectory and overshadows the company's "consistently industry-leading unit economics."

Shares remain Neutral rated with an unchanged $620 price target.

Latest Ratings for CMG

May 2018ArgusUpgradesHoldBuy
Apr 2018Maxim GroupDowngradesBuyHold
Apr 2018BMO CapitalMaintainsMarket PerformMarket Perform

View More Analyst Ratings for CMG
View the Latest Analyst Ratings

Posted-In: Bank of America Fast Food Joseph Buckley Nick SetyanAnalyst Color Restaurants Analyst Ratings General Best of Benzinga


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