Market Overview

SunTrust Initiates Chipotle With Buy Rating, $850 Target

Share:
  • Chipotle Mexican Grill, Inc. (NYSE: CMG) shares have gained 5 percent year-to-date, and have been range-bound between $700 and $750 since the last week of August.
  • SunTrust’s Jake Bartlett initiated coverage of the company with a Buy rating and a price target of $850.
  • Mentioning that the company has more sales levers than it did in the past, Bartlett added that its share price performance may be strong in 2016.

Analyst Jake Bartlett said that Chipotle has “more sales levers to pull than in past years, including marketing, catering, online, throughput initiatives and the return of Carnitas.” He expects commodity costs to be flattish, following high inflation of around 7.5 percent in 2014 and around 4.5 percent in 1Q15.

Bartlett further expects Chipotle’s new secondary brands, namely ShopHouse and Pizzeria Locale, to enter additional markets, which would bring back investor focus on the company’s long-term opportunity as a portfolio company.

Chipotle’s same-store sales is expected to accelerate from 2.5 percent in 3Q15 to 5.5 percent in 2016, driving the company’s sales growth. Bartlett also estimates a 100-150bps boost from the return of Carnitas. In view of historical trends, the company would be poised for “another 3 year SSS cycle with SSS accelerating to +double-digits by 2017,” the analyst added.

In the report SunTrust noted, “CMG has faced rising COGS since 2011, but we expect that to change in 2016. After rising ~7.5% in 2014 and 4.5% in 1Q15, commodities were favorable in 2Q which we expect will continue for at least the next four quarters and most major commodities are looking flat to favorable in 2016.”

Bartlett added, “We think CMG is set up for another year of strong stock price performance in 2016.”

Latest Ratings for CMG

DateFirmActionFromTo
Oct 2019MaintainsSell
Oct 2019MaintainsOutperform
Oct 2019MaintainsNeutral

View More Analyst Ratings for CMG
View the Latest Analyst Ratings

Posted-In: Jake Bartlett SunTrustAnalyst Color Initiation Analyst Ratings

 

Related Articles (CMG)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
PBHTD SecuritiesMaintains100.0
BEP.PR.ETD SecuritiesDowngrades45.0
CTEKBenchmarkMaintains5.0
IPHIDA DavidsonReiterates84.0
JYNTDA DavidsonMaintains32.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

Demandware Resolves Shipping & Transit Lawsuit

VisionChina Media Awarded Exclusive Bus Wi-Fi Concession Contracts in Chongqing City and Taiyuan City