Credit Suisse analysts weighed in on Mexican fast-food chain Chipotle Mexican Grill, Inc. (NYSE:CMG) and semiconductor manufacturer Cypress Semiconductor Corporation (NASDAQ:CY). One analyst is bullish on Chipotle’s recovery following recent setbacks, while another remains sidelined on Cypress due to unimpressive recent performance. Let’s take a closer look:
Chipotle Mexican Grill, Inc.
Analyst Jason West of Credit Suisse weighed in on Chipotle and although he recognizes a “risk of near-term disappointment,” he remains bullish on the long-term recovery of the Mexican fast-food chain. West increased his target price for Chipotle from $475 to $550 and reiterated an Outperform rating.
Chipotle was plagued with food safety scandals throughout 2015, including several E. coli and norovirus breakouts. These troubles lead to turbulence in customer confidence and questions on the accuracy of Chipotle’s slogan, “food with integrity.” Despite these recent troubles, West is “encouraged by the improved traffic [he is] seeing at CMG, which suggests customers are willing to give the brand another try and gives [him] higher confidence in the recovery scenario baked into [his] model.”
The company is closely monitoring its reputation and evolving customer sentiments. West added, “our analysis of Google Trends, suggests early signs of a positive shift in sentiment towards CMG.” These current conditions leave lowered expectations for short-term performance of CMG, while indicating increased confidence in a long-term recovery and success. West has lowered his 1Q16 forecasts and is waiting for CMG to provide updates on its first quarter sales in the next 1-2 weeks. West stated, “aggressive promotional efforts have likely helped traffic in recent weeks, but at the expense of ‘real’ sales.”
Jason West has a 71% success rate on TipRanks and an average return of 13.1% per recommendation. The average 12-month price target on the stock is $486.32 based on 25 analysts who have weighed in on CMG in the last 3 months. Of these analysts polled by TipRanks, 10 are bullish, 13 are sidelined and 2 are bearish.
Cypress Semiconductor Corporation
In addition, analyst John Pitzer of Credit Suisse weighed in on Cypress Semiconductor following the Analyst Day event hosted by the company. Pitzer reiterated his Neutral rating of the semiconductor design and manufacturing company following “mostly in-line” commentary at the event. Cypress management reiterated C1Q revenue and EPS guidance of $425m and $0.06, respectively.
The analyst added, “Even when accounting for target rev and margins, the stock looks more fairly valued than undervalued trading at 16.3 times CY17.” His lack of confidence in the company is also supported by the instability of the semiconductor industry amid a major consolidation wave. Pitzer has also developed “concerns around the potential impact on pricing as China increases their presence in the Memory market.”
Pitzer commented, “While we were encouraged by management’s focus on profitability and margin targets; execution needs to improve.” His low confidence in CY is based on the company only beating guidance 14 out of last 28 quarters.
The analyst reiterated a Neutral rating with a 12-month price target of $8 for Cypress.
According to TipRanks, Pitzer has a 63% success rate on TipRanks and a 15.1% average return per recommendation.
Cypress has a $11.21 average 12-month price target based on 9 ranked analysts who have evaluated CY in the last three months. Of these analysts polled by TipRanks, 6 of these analysts are bullish while 3 remain sidelined.