Analysts React To Chipotle's Q4 Earnings Report

Chipotle Mexican Grill, Inc. CMG showed signs of growth when it reported its fourth-quarter results in line with Street, with skeptics calling for more sustained top-line proof and significant work on the cost front.

Also, the fast food chain kept both the market as well as investors guessing by not including its previous EPS guidance of $10 as part of the earnings print, while the same-store sales guidance was for high-single-digit growth in FY 2017.

From The Street

Following are some the thoughts of key Wall Street firms that tracked Chipotle’s results:

Jeff Farmer of Wells Fargo maintains a Market-Weight rating on the shares, and sees sustained same-store sales recovery through 2017. The analyst is modeling Chipotle's same-store sales growth to rise 16 percent in the first quarter and 10 percent in the second quarter — both of which are conservative estimates.

Barclays’ Jeffrey Bernstein too has an Equal-Weight rating on the company. Though Bernstein believes the key growth drivers include digital ordering and payment, enhanced second make line, and new menu items, he noted the earlier guidance for EPS of $10 and margins of 20 percent are a “stretch.”

Wedbush analyst Nick Setyan also maintained a Neutral rating on the stock, saying the current valuation “appropriately reflects an improving top-line trajectory, as well as a realistic trajectory for margin improvement.” Setyan called for sales acceleration to achieve management’s high-single-digit comp guidance for 2017.

Further, Baird became increasingly optimistic about the fundamental outlook for Chipotle after the company’s renewed focus on strengthening unit-level execution. That said, analyst David Tarantino still rates the stock Neutral as he would like to gain better visibility to become more constructive on the stock.

Meanwhile, Stephens’ Will Slabaugh maintains an Underweight rating on the company, as he remains concerned with heightened sales and profit recovery expectations in future quarters.

Jefferies’ Andy Barish also remains Underperform-rated on the company on negative same store sales. The analyst, however, expects same-store sales compares to remain easy through the remainder of first quarter, despite the absence of aggressive food promotions and giveaways.

Also, Brett Levy of Deutsche Bank kept his Sell rating intact as “management’s description of its roadmap has not changed our view that the company still faces an uphill battle to regain its prior sales, profits, valuation levels.”