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Are Investor Expectations For Chipotle's Recovery Too Aggressive?

Are Investor Expectations For Chipotle's Recovery Too Aggressive?

Chipotle Mexican Grill, Inc. (NYSE: CMG) is seeing shares spike considerably on Tuesday, up nearly 6 percent following news that the struggling chain saw comp sales rise 14.7 percent in December.

The numbers may be a bit misleading, however, as the company was facing a relatively easy comparison year-over-year, recovering from a devastating string of food safety issues.

Analysts at Stephens are not convinced of a Chipotle comeback, however, saying, “The comp improved as CMG lapped its food safety scare from late 2015, though we remain concerned with soft 2-year trends.”

Chipotle has pre-announced its fourth-quarter results, which came below consensus expectations with EPS in the $0.50–$0.58 range versus a consensus estimate of $0.99 and same-store sales decline of 4.8 percent against a 3.5 percent estimate.

Stephens maintains its Underweight rating on the company with a $325 price target and believes expectations for margin and sales recoveries are too aggressive.

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