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Piper's Regan On Chipotle Mexican Grill, Inc.: Here Is The Good News

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Chipotle Mexican Grill, Inc. (NYSE: CMG) shares are up 2 percent on Tuesday approaching the company's earnings report. "The good news is for [earnings], everybody is aligned," Piper Jaffray's Nicole Regan told CNBC on Monday. "The Street, our estimates and management is aligned about how much comp will be down," she added.

Next quarter guidance will be important on the call, Regan said, and added that the key point forward will be to understand what Chipotle's strategy is after the conclusion of the CDC investigation.

The analyst also discussed Chipotle's valuation.

Piper holds an Outperform rating on Chipotle with a $500 price target.

"It's starting to be a really fair multiple in the short term, because it's a very solid balance sheet," solid unit economics and strong management.

In November, Regan said the company's handling of the E. Coli crisis was in line with its "brand equity," praising management's "quick reaction time" to alter its labor force and store closures amid the outbreak. At that time, she said store closures could harm existing Chipotle earnings estimates by 5 percent.

The current Estimize consensus calls for earnings of $1.94 per share when Chipotle reports, on revenue of $1.005 billion -- slightly above the Street's expectations.

Of note, Chipotle sales per store peaked and labor costs spiked even before the E. Coli crisis, so investors should pay attention to margin pressure and store-by-store figures after the results are released.

Latest Ratings for CMG

DateFirmActionFromTo
Oct 2017BMO CapitalMaintainsMarket Perform
Oct 2017Credit SuisseMaintainsNeutral
Oct 2017BarclaysMaintainsEqual-Weight

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